Jewellers are applauding FM Nirmala Sitharaman‘s proposed reduction in custom duty to 6 per cent on gold and silver along with a reduction in custom duty on platinum to 6.4 per cent.
They are calling the Union Budget 2024 a game-changer for the diamond, gems, and jewellery industry and it has provided an opportunity for India to step closer to becoming a global diamond trading hub.
“The reduction in import duties is a major boost for our industry, enhancing affordability for consumers and competitiveness for the manufacturing sector by releasing working capital. The abolition of the 2 per cent Equalization Levy and introduction of the Safe Harbour Rule on the sale of rough diamonds at SNZs will firmly establish India as a global rough diamond trading hub. These combined measures will propel the sector’s growth, and generate lakhs of employment opportunities by benefitting the small-scale jewellery manufacturers and exporters and diamond cutters and polishers,” said Vipul Shah, chairman, GJEPC.
“This move is expected to boost gold demand in the country and create jobs for artisans. It is expected that the duty reduction will drastically cut down gold smuggling , thereby curbing illegal trade and enhancing tax revenues,” MP Ahammed, chairman, Malabar Group added.
The reduction in import duty on gold has been a long-standing demand for gold retailers.
Highlighting how the FM’s decision will boost demand, Ramesh Kalyanaraman, ED, Kalyan Jewellers said, “The new tax regime, with its focus on increased disposable income, will boost demand for jewellery as consumers will invest in asset creation.”
“The implementation of safe harbor rates for the diamond-cutting industry, for foreign mining companies selling rough diamonds in India, will stimulate growth, boost consumer spending, and increase global competitiveness,” added Amit Pratihari, MD, De Beers Forevermark.
According to Rahul Guha, Director, CRISIL Ratings, “Safe Harbour rates for foreign mining companies selling raw diamonds in India will benefit the domestic diamond sector. 92 per cent of the raw diamonds mined globally are polished in India. With this announcement, import prices for diamonds will reduce, which will have a spillover effect on polishers and exporters, reducing export and retail prices in tandem. This will likely push polishers’ volumes in an otherwise subdued export environment, while supporting operating profitability.”
“Safe Harbour rates for foreign mining companies selling raw diamonds in India will benefit the domestic diamond sector. 92% of the raw diamonds mined globally are polished in India. With this announcement, import prices for diamonds will reduce, which will have a spillover effect on polishers and exporters, reducing export and retail prices in tandem. This will likely push polishers’ volumes in an otherwise subdued export environment, while supporting operating profitability.”
Echoing similar thoughts, Dr. Saurabh Gadgil, chairman and MD, PNG Jewellers said, “By lowering import duties, we anticipate an increase in gold consumption and a moderation in gold prices, which have recently reached record highs. Furthermore, this move is not only beneficial for the industry but also provides relief to consumers.”
“Gold futures in India had already started falling and that is a good sign,” added Baby George, CEO Joyalukkas Group.
