Budget 2022: Are Diamonds and Gems the Union Budget’s Best Friend? Here’s What Experts Say
The gem and jewellery sector in India is overwhelmed by the Government support extended to the gem and jewellery industry in the Union Budget 2022-23. In her Union Budget speech, finance minister Nirmala Sitharaman announced that the customs duty on cut and polished diamonds and coloured gemstones has been reduced from 7.5% to 5%, while that of simply sawn diamonds would attract nil customs duty. It was also announced that the export of jewellery through e-commerce, a simplified regulatory framework shall be implemented by June this year
According to the Gem & Jewellery Export Promotion Council (GJEPC), the Indian gem and jewellery sector is considered one of the leading contributors to the national economy and the country is the undisputed leader in diamond processing. So has the Union Budget 2022 been a sigh of relief for the sector? “Reduction in import duty on cut and polished diamonds to 5% will further help in strengthening the sector and retain its leadership position,” expresses Colin Shah, chairman, GJEPC.
Though the industry appreciates the reduction in the custom duty, there’s a lot more that was expected out of the Union Budget 2022. For Vastupal Ranka, Director, Ranka Jewellers & Rare Jewels, A Ranka Legacy, while the budget did not meet of the jewellery industry’s expectations, a reduction on custom duty for cut and polished diamonds and gemstones to 5 percent from last year’s 7.5 percent is appreciated. “This will not only allow for the procurement of gems and diamonds at a reduced cost, directly impacting the cost incurred by the customer, but will also give the industry some breathing space. The hope is that this percentage decreases further in the coming years,” adds Vastupal Ranka.
He also points out the absence of any mention of a GST reduction against the purchase of gold could be disastrous to the sector in the long run. “Considering the financial loss everyone has witnessed during the last two years, owing to the pandemic, a relief in the form of reduced GST, would have encouraged spending and investments of gold,” adds Vastupal Ranka.
For jewellery designer Dishi Somani, Founder of Dishis Designer Jewellery, the Union Budget has brought a little relief to the industry post pandemic. “The jewellery industry was at a halt in the pandemic situation, and we finally have a little hope for the situation to improve now. In the budget announcement today, the Finance Minister gave a little relief in our sector by giving many relaxations for our buyers and jewellers. The customs duty on cut and polished diamonds, gems will be reduced to 5% in the upcoming fiscal year, and we think it is a beneficial move for us and this will also increase the buying capacity of the customers,” says Dishi Somani.
Similarly, Darshan Sanghavi, MD, Maya Sanghavi Jewels strongly believes that the announcement will help the industry. So, how will it impact the industry? “It would help in stabilising the current price hike and shortage of supply in gemstones and cut and polished diamonds due to the current increase in demand.”
FM also announced that the export of jewellery through e-commerce, a simplified regulatory framework, shall be implemented by June this year. Dishi believes that with this platform, the global business will also expand, and Make in India will also grow. “This “simplified regulatory framework” will help the industry work better in terms of more clarity and structure for the whole industry”, adds Dishi.
Calling it the need of the hour, Colin believes that the e-commerce sales of jewellery are growing exponentially in the US and the consuming markets. Speaking about its potential, Colin Shah adds, ““The Government has been quick to realise the potential of e-commerce and has proposed to implement a simplified regulatory framework by June 2022 to facilitate gem and jewellery exports through the e-commerce route, ensuring that jewellers from every district in the country are able to ship their products overseas in a fast and economical manner.”.
According to Ranka, facilitating the export of jewellery through e-commerce websites is a great idea provided the regulatory frameworks put in place are effective and there is a mannerism to avoid fraud and ensure the safety of retailers and customers alike.
Similarly, Ketan Chokshi, jewellery designer & MD, Narayan Jewellers agrees that the budget this year did do much for the gems and jewellery industry to recover from the losses. Though he feels the new norms might boost sales. “The announcement of a simplified regulatory framework to facilitate the export of jewellery through e-commerce is a welcome move and will encourage the Indian designer jewellery brands to build an International customer database and export jewellery without any hassle. This will boost the sale of Jadau, and Gold as International buyers will have easy access,” says Chokshi, adding, “Further the reduction in import duty to 5% gives a little relief to diamond traders as cut and polished diamonds add up to only 5% of total imports of diamonds. Apart from this nothing else has been addressed including the Gold monetization scheme, reduction in gold import Duty, increase in pan card limit amongst others.”
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