All eyes are on Finance minister Nirmala Sitharaman who will be presenting the Union Budget February 1. Jewellery sector which is already reeling under heat due to sluggish sales expects some relief ahead of the forthcoming Union budget roll.
The second half of 2019 was not very good for jewellery industry mainly due to spurt in the international pricing and hike on import duty. Liquidity crunch in the Indian economy is yet another factor thwarting the growth in this sector.
Speaking on pre-budget recommendations and expectations, S Kalyanaraman is Chairman and Managing Director of Kalyan Jewellers, said, The government’s Digital India initiative has propelled the shift towards a cashless economy. This clubbed with multiple benefits offered by banks to credit or debit card customers, is a boon to the organized jewellery sector and is paving way towards ensuring transparency while boosting the gems and jewellery industry.”
Let’s shed light on the other voices from the industry..
Cut on Import Duty from 12.5% to 8.5%
The present import duty slab stands at 12.5% and a GST of 3%. There is strong demand to reduce the import duty to further escalate the demand. Speaking on same, Rohan Sharma, Managing Director of RK Jewellers South Extension said, “In past 12 months, after the government has raised the tariff on gold, since then the price of gold is escalated. We are expecting government to come up with good policies to bring stability and better phase in the jewellery industry. We feel that there is an immediate requirement to cut down custom duty to 5% and import duty charges to 2.5% from existing 7.5 %.
Echoing with Sharma, Amit Gadkari, CEO of Irasva said, “The Jewellery industry is seeking help from the Government on two fronts – the supply side and the demand side. Reduction in import duty on gold will help reduce the manufacturing costs while a reduction in personal income tax will help accelerate demand for luxury and lifestyle products of which Jewellery constitutes a key category.”
Vaibhav Saraf, Director, Aisshpra Gems & Jewels asserted,” We recommend to revise tax slabs for individual tax payers. Reduction in personal income tax rates could engage the consumption and spur overall demand for goods and services.”
Boost domestic schemes
The industry is voicing strongly that measures should be worked out to give a boost to domestic schemes so the reliance on imported gold can be slashed or replaced. Speaking on same, Prithviraj Kothari, Director of Riddhi Siddhi Bullions Limited (RSBL) said,” There is a big gap between the international and domestic market and nobody keeps a watch on the amount of gold coming in the market. Policies should be defined for both the markets so that our home industry and handmade jewellery which we have in the market doesn't get affected."
Kothari also said that the import duty on gold should be reduced. "That is one of our prime priorities gold”. Kothari dismissed apprehensions on GST rates increasing to 5% from existing 3% and feels if the GST is increased, the client will also face a loss and nobody will sell the household jewellery as well.
The RSBL Director also envisaged gold rates to play between Rs 45,000 and Rs 46,000 for a couple of months.
Reforms for coloured gemstones
This increase in customs duty for cut and polished coloured gemstone along with gold is the biggest hit. With these increased duties, it becomes difficult to compete in the world market and export, as China is a major competitor informs one leading jeweller from Agra.