Budget 2025 Expectations: After Customs Duty Cut In Gold, Here's What Gems & Jewellery Sector Desires From FM

Budget 2025 Expectations: The gems and jewellery sector cheered the sharp cut in customs duty by Finance Minister Nirmala Sitharaman during Budget 2024, and further the introduction of the Safe Harbor Rule for the sale of rough diamonds was an added bonus. The sector is back with a new wish list for FM Sitharaman in the upcoming Union Budget FY26 which will be presented on February 1.

Vipul Shah, Chairman, GJEPC last week met FM Sitharaman during a pre-budget consultation held in Delhi on December 2nd. He presented key recommendations on behalf of the gem and jewellery industry, aimed at fostering growth, enhancing global competitiveness, and addressing the industry's critical challenges.

Here are what recommendations Vipul Shah, Chairman of GJEPC has made:

Notably, GJEPC has expressed gratitude for the announcement of the Safe Harbour Rule of taxation for trading rough diamonds at SNZ by Foreign Mining Companies FMCs.

However, Shah revealed that GJEPC is receiving various queries from FMCs about its applicability. To address these concerns, GJEPC has prepared a list of FAQs on the Safe Harbour Rule.

There, Shah has requested a co-fund for a diamond promotion campaign to revive sector demand. He revealed that GJEPC has launched a global campaign to promote natural diamonds in collaboration with leading international diamond mining companies and countries. This initiative aims to counter the strong headwinds faced by both diamonds due to geopolitical challenges.

To date, Shah said, GJEPC, through crowdfunding from its members, has contributed ₹15 crores towards this campaign. However, in light of the ongoing challenges, GJEPC requested the Government's support in these troubled times. The Council urged the approval of a matching grant for the generic promotion of diamonds in international markets to protect jobs, safeguard exports, and preserve millions of livelihoods while ensuring India's global leadership in diamond exports.

Further, he added, to achieve the goal of a "Viksit Bharat," the industry requires robust infrastructure development. The Council, with funding from the industry, is developing the world's largest jewellery park in Mumbai, and similar parks are also emerging in Meerut, Bangalore, and other cities. We propose the inclusion of Jewellery Park in the harmonized list of infrastructure to support the sector's growth.

Also, in reference to creating an ecosystem for platinum, GJEPC proposed the inclusion of the supply of duty-free platinum through nominated agencies, the announcement of a tariff rate for platinum, the introduction of duty drawback similar to gold and silver, and the creation of a new HS Code for gold-platinum alloys, Shah said.

Shah expressed his optimism regarding the upcoming Union Budget and hopes that the Finance Ministry will take up these measures to sustain the growth momentum of India's gem and jewellery sector.

In the previous Budget, Sitharaman trimmed custom duty on gold and silver bars by a massive 60% to 6% from the earlier 15%. While customs duty on gold and silver gore has been cut by 62.7% to 5.35% from earlier 14.35%.

On the customs duty cut, Shah said, "We thank the Hon'ble Finance Minister for reducing the import duty on precious metals in the last budget, a move that has spurred unprecedented growth in the sector. This is evident from the multiple stock market listings of family-run jewellery businesses, the expansion of major retailers overseas, and the planned opening of 3,000 retail outlets in the next two years, creating lakhs of employment opportunities across the country."

Shah further expressed gratitude to FM for introducing the Safe Harbor Rule for the sale of rough diamonds at SNZs by foreign miners.

The PM Modi-led government has come to power for a second term in India, and Finance Minister Nirmala Sitharaman is all set to present her seventh Union Budget for FY25-26 on February 1, 2025.