Industry reactions: Budget 2015-2016 disappoints gem and jewellery industry

Vipul Shah, Chairman, GJEPC

“Our congratulations to the FM on a budget that has done well for all segments with a set of sound initiatives in infrastructure, exemptions and benefits for the individual tax payers and a good start to get the economy moving on the ‘Make in India’ growth track. While the expectations from the budget have been extremely high from the industry, we believe that it is a bold and clearly defined budget and must be viewed in the current context as a tool to augur growth, streamlining and simplification of taxation structure and attract investments – which the FM has done.

As far as the G&J industry is concerned, our only reaction is disappointment! The FM has completely over-looked one of the most significant areas to curb black money and a long pending demand from the G&J industry to reduce the gold import duty. Smuggling of gold plagues the industry and leads to illegal trading and the duty reduction would have helped us control the issue to a very large extent.

We commend the FM’s effort to identify innovative ways to reduce demand for overseas gold demand and control the CAD, by introducing the gold monetization scheme to and Indian gold coins.

Some of the other critical matters that should have been addressed simplification of the process for direct sourcing of roughs, introduction of Turnover based Income Taxation System and an exclusive and separate duty structure for natural and man-made diamonds.”

Rajiv Popley, Director, Popley Group

“Gold monetisation will appreciate gold investments and will thereby facilitate in allowing and encouraging consumers to invest in gold, unlike last year when the gold investments were prohibitive.

This will aid in abolishing black money and laundering in gold. Understanding and taking into consideration the sentiments of Indian consumers the Government is making a clean path of investing in gold. Wealth tax abolishing will also encourage purchase as this was taxed earlier. Consumers will declare the gold purchases made as the wealth possessed by them is not taxed under wealth tax. This will make jewellery industry a cleaner and encouraging industry for investing PEs and institutions and help boost the industry in a positive manner. Jewellers will not be considered black marketers or accrued with money laundering as this is a chain reaction. Consumers don't declare purchases due to tax evasion and hence the jewellers can't declare their sales. Buyer’s sentiments will definitely be positive and will also lead to encourage gems and jewellery exports and manufacturing sector will be given a boost. Make in India will grow as a reality as the industry is labour intensive and Indian Jewellery is very highly appreciated internationally also.”

Ishu Datwani, Founder, Anmol Jewellers

“The move to monetize gold lying idle is a huge positive for the industry, however not reducing the duty on gold is a little disappointing. But overall it looks like a good budget that will give a push to the overall economy.”

Prasad Kapre, CEO, Style Quotient Jewellery Pvt Limited

"The union budget has mixed reviews from Gems and Jewelry industry. Three major positive points are:

- Introduction to gold monetization scheme to be replaced by gold metal loan and gold deposits.

This is a positive change as it will help consumers to earn bank interest on jewellery that they currently posses. So it just doesn't stay as a investment locked in lockers but becomes productive and gives two forms of returns on investment a) bank interest and b) appreciation of assest over time. This will encourage consumers to buy more jewellery. Further trade will also be able to buy bullion from banks that have such deposits. This will help in reducing the overall dependence on import of gold.

- Introduction of gold sovereign bonds- This is interesting as it acts as an alternative way to invest in gold and earn interest without physically buying the same or importing it.

- Commence work on manufacturing of Indian gold coin with Ashok chakra - This will ensure that India need not import coins anymore. This will help in recycling of existing gold in the country and also help in improving the Current account deficit in the economy.

Unfortunately there has been no reduction on import duty of gold which is disappointing and disturbing.

Another barrier to sell jewellery will be the introduction of giving the PAN card number of every consumer buying goods above Rs. 1.00 lakh as the consumers are generally reluctant to do so."

Saurabh Gadgil MD PN Gadgil Jewellers Pvt Limited

“The government will introduce gold monetization schemes to replace gold deposit schemes and gold metal loans. Depositors of gold will earn interest on their metal account. The government will introduce a sovereign gold bond, which will earn a fixed rate of interest.

There was no point in continuing the Wealth Tax as the cost of collection was high. This will help simplify the tax structure and also rationalize & remove exemptions to eliminate tax disputes and will promote widening of the tax base.

The government will mint gold coins with Ashoka Chakra to reduce demand for gold coins minted outside India. India is the largest importer of gold in the world. The country is estimated to have over 20,000 tonnes of gold.

No cut in Gold import duty will certainly dent the industry. PAN must for any sale exceeding Rs. 1 Lakh, our majority of population still stays in the rural areas. People not having pan cards will have difficulty in investing in Gold.

Service Tax increased from 12.36 per cent to 14 per cent - This will increase the restaurant and mobile bills among others for the common man.”

Ashutosh Sharma, MD Shreem Jewelers “This should benefit the industry as a whole, and consumer interest will grow towards this sector as now they'll be receiving interest on their investment made in the deposits. The jeweler will be happy with getting loan on their part and use the money in their working capital requirements.”

Anand Kulthia, Director, Kulthia Jewels “We all had a great expectation from this budget since it is the first budget of Sri Narendra Modi government.

Though Finance minister Mr Arun Jaitley balanced it in a very meaningful manner and i am sure it may help in industrial growth and overall development of our country. As far as our Jewelry industry is concerned all were expecting a drop of import duty but no far there is any such announcement. In away its good only as most of the people are comfortable with current rate.”