Budget 2024: Gem and jewellery industry calls for reduction in import duties on gold, cut and polished dia

The gems and jewellery industry has articulated its wish list for Finance Minister Nirmala Sitharaman, encompassing key considerations such as a reduction in import duties on gold and silver and the introduction of a Diamond Imprest License, among many others.

The industry, which contributes about 10% to the country's merchandise exports and employs nearly 5 million people, has seen a fall in exports recently, and this requires attention of the government.

Mahindra and Tata Motors have pressed Indian officials privately not to lower import taxes of 100% on electric vehicles and protect domestic firms and their foreign investors as the government reviews Tesla's plans to enter the market, Reuters reported last month.

Budget: The interim Budget with strategic moves can give the Indian gold jewellery industry a boost. An infrastructure boost can ensure competitive prices for raw materials and availability of gold loans. Skill development and government support for machinery procurement will enhance manufacturing capabilities. Special financing can help Indian brands expand globally. Budgetary support for cost of capital and marketing will improve reach and attract international brands. These steps can make India a global hub for the gems and jewellery industry.

India is the world's largest centre for diamond cutting and polishing, accounting for around 95 per cent of the world's polished diamond production, while the US and China are the primary consuming markets, together accounting for around 65 percent of the country's exports.

Stuck in the middle of the value chain, the Indian industry has to fight fires at both ends - depressed prices on oversupply and weak demand. Prices of polished diamonds, of which India processes the bulk, have collapsed further than retail prices, where the country's share is not substantial. The direction for diamond exports is clearly towards building brands and developing newer markets.

The commerce ministry's support for lowering the tariffs comes ahead of the Interim Budget due next week. If a reduction in the taxes is accepted, Finance Minister Nirmala Sitharaman could announce the decision in her interim budget on February 1.

Elon Musk's Tesla has approached the government with a detailed proposal linking the quantum of the investment with the number of cars it can import with lower duty.

The industry's talent is spread across every zone and this industry can generate lots of jobs commensurate with the talent. The future is bright but we seek a collective commitment from every exporter to contribute to increasing exports despite headwinds and challenges, said the minister.