The Indian budget, which was announced today, had some encouraging news in it for traders and manufacturers of gemstones. India’s finance minister Palaniappan Chidambaram identified a duty exemption on rough cubic zirconia, a growing market in the Indian jewellery sector. The duty on cubic zirconia has been lessened from 10% to 5%. The duty on rough coral also has been reduced from 10% to 5%. Coloured gemstones did not favour any reactions.

Also, the presumed profit base for turnover tax, which the government wanted to bring the gem and jewellery industry under, has been reduced to 6% from 8% of last year. Gem & Jewellery Export Promotion Council (GJEPC) chairman Sanjay Kothari reflected disappointment on the budget as the long awaited abolition of duty on coloured gemstones was not addressed. The industry commands a growth potential in export markets if the duty was abolished. He was also not too happy at the decision to not reduce the presumptive profit base for turnover tax to the industry norm of 3%, as promised earlier.

“The industry had explained that worldwide, profits were in the 2-3% range and that this high a level of presumed profit would mean the scheme would remain unutilised. The current budget has envisioned a reduction to 6% but the industry simply cannot work on so high a presumed profit base,” he said. Kothari also opined that the attention given to the coral and cubic zirconia though were welcomed, although the industry did not stand to benefit greatly through that.