GJEPC Presents Budget Recommendations to the Government

The Gems and Jewellery Export Promotion Council (GJEPC) presented its pre-budget wish-list for the upcoming Union Budget 2014-15 to Arun Jaitley, Finance Minister. The recommendations include presumptive taxation regime, reduction in import duty on gold and silver by 10 per cent to 2 per cent etc.

The Indian gems & jewellery (GJ) sector is the leading foreign exchange earning sector and accounts for 14 per cent of country’s total merchandise exports. The volume of exports stood at US$41 billion during FY2013-2014. In regards to the world diamond market, India’s share is 60 per cent in terms of value, 85 per cent in terms of volume and 92 per cent in terms of pieces. Despite of this, the Indian G&J and diamond industry has been plagued by various issues like migration of business of manufacturing and trading to low cost labour intensive countries like China and Thailand and to emerging trading hubs like Dubai, depleting profit margins due to increase in the price of rough diamonds etc.

To tackle the problems, GJEPC has come up with some recommendations which would result in the prosperity of the industry. The recommendations are:

• Introduction of presumptive taxation in the industry which will bring India at par with peer manufacturing centers like Israel, Thailand and China; it will increase government revenue and simplify the procedure and litigation involved in the collection of taxes.

• Reduction in the import duty on gold and silver from 10 per cent to 2 per cent which will help in curbing the illegal activities like smuggling of gold; also, it will reduce the transaction cost of exports in as much as the exporter will not be required to block his fund of as high as 10 per cent till the inward remittance does not come.

• GJEPC along with Bharat Diamond Bourse (BDB) has proposed to set up rough diamond viewing facility in Mumbai. The main objective is to provide members of GJEPC and BDB direct access to rough diamonds which are otherwise brought to India via trading centres.

• Imposition of 2 per cent import duty on import of broken diamonds

• Abolition of import duty on Cut & Polished Coloured Gemstones

• Import Duty abolition on Preforms of Precious and Semi-Precious Stones

• Abolition of Tolerance issue of re-import of certified diamonds

• Revision of All Industry rates of Duty Drawback for Gold and Silver

• Re-introduction of facility of interest subvention of 3 per cent on rupee export credit in Gem & Jewellery Industry not only for Small Scale Units but also for MSI Units

• Zero-rated indirect tax regime and all duties collected in way of Service Tax, VAT or GST should be refunded by way of drawback at the rates computed by way of survey of actual exports.

• Any transaction in respect of derivatives i.e. forward contract/option contract as permitted by RBI should not be treated as “speculative transactions” and to be treated at par with trading in derivatives in specified stock exchanges.

• Amendment in Finance Act 2012 w.r.t. Domestic Transfer Pricing

• Reintroduction of relief under 80 HHC for exports and exclusion of the same under MAT / AMT

• Abolition of import duty on Rhodium

• Import Duty reduction on Machineries from 10 per cent to 5 per cent

• Abolition of import duty on Worked Coral

• Abolition of 6% Central Excise Duty on Imitation Jewellery

• Implementation of EDI system at BDB for exports

• Request for Risk Management System (RMS) in imports/Exports at Precious Cargo Customs Clearance (PCCCC) Bharat Diamond Bourse (BDB), BKC