Budget 2022: Gems and jewellery sector hails reforms introduced by FM

The gems and jewellery sector is overwhelmed with the Union Budget 2022-23. There is a swathe of favourable policy reforms announced that empowers the industry and
puts it on a firm footing to capitalise on growth opportunities in the coming decade, says a release by the The Gem and Jewellery Export Promotion Council
(GJEPC). 

Reduction in customs duty on cut and polished diamonds and coloured gemstones from 7.5 per cent to 5 per cent and nil on sawn diamonds is a welcome move. 

“The Indian gem & jewellery sector is one of the leading contributors to the national economy and the country is the undisputed leader in diamond processing. Reduction
in import duty on cut and polished diamonds to 5 per cent will further help in strengthening the sector and retain its leadership position,” says Colin Shah, Chairman, GJEPC. 

“India has always aspired to be the ‘Jewellery Capital of the World’ but for that besides manufacturing we need trading as well. High duty on cut and polished diamonds
was impacting business and we were losing out to Dubai, Hong Kong and Antwerp. Lower duties will help us to bring that business to India,” he added. 

Besides that, Shah explains that since Indian jewellery exporters have been working with retailers across the globe for years, there have been rejections, breakage,
repair etc. but these pieces of jewellery and gemstones could not be brought into the country because of high duties. “It will enable manufacturers to bring those back,” he said.

Nearly 10 per cent of the rough diamonds that come into India are sawn diamonds. Sawn diamonds are diamonds where the miner is sawing the diamond into half. So it
is a semi-processed rough diamond. “With a 7.5 per cent duty it was unviable to manufacture (cut and polish) the diamond in India. Now with the duty becoming nil we will be able to manufacture sawn diamonds in India,” Shah argued.

Another positive point is the extension of the Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs up to March 2023. This will benefit the sector as nearly 90
per cent of the gem and jewellery sector consists of MSMEs, explains Shah. 

“Acceptance of personal surety bonds in place of bank guarantee for import of gold will meet our longstanding demand of simplifying duty free gold availability, especially
to the SME exporters of gold jewellery and revive the exports of plain gold jewellery. Bank guarantees led to blockage of capital. Surety bonds will lead to unlocking of capital for all our manufacturers. This will increase liquidity and help gold jewellery
exports,” added Shah.

Shah is also pleased with the announcement of a simplified regulatory framework by June 2022 to facilitate gem and jewellery exports through the e-commerce route.

“This will ensure that jewellers from every district in the country are able to ship their products overseas in a fast and economical manner. This is the need of the
hour as the e-commerce sales of jewellery are growing exponentially in US and the consuming markets. The broad basing of the exports through this measure have the potential to grow the exports from this sector to $100 billion in the next 5 years,” he said. 

The finance minister’s announcement to bring in a new SEZ regime by changing the SEZ Act will also benefit the gems and jewellery sector.   

“The exports from SEZ are growing at a rapid pace and have the potential of getting FDI in manufacturing and exports of jewellery from SEZ and take the country’s exports
to one trillion dollars within the next three years,” he added. 

Currently India is the second-largest exporter of gold jewellery in the world, next to China. Studded Gold jewellery exports for the period April 2021 to December
2021 grew by 56 per cent to $4084.37 million  as compared to $2615.09 million for the same period of 2019. However, exports of plain gold jewellery for the period of April 2021 to Dec 2021 declined by 57.47 per cent to $2830.84 million as compared to $6655.84
million for the same period of 2019.  

The overall gem and jewellery exports from April 2021 to December 2021, grew 5.76 per cent to $29084.0 million as compared to compared to $27500.85 million for the
same period in 2019.  

“This year we will end the year between $35-40 billion. We aspire to go to $70 billion in the next three years and to $100 billion in the next 5-7 years,” said Shah.   

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