Jewellers across the country today hailed the government's decision to roll back excise duty on both branded and unbranded jewelleries, saying the move would help in the growth of the industry.
However, they felt that the government should have also withdrawn custom duties.
"The entire industry is very happy that Finance Minister Pranab Mukherjee understood the plight of our industry and took the decision accordingly," All-India Gems and Jewellery Trade Federation Chairman Bachhraj Bamalwa told PTI.
The decision saved the gems and jewellery industry from difficulty, he added.
"We fear that higher customs duty will give rise to smuggling of bullion which will be a problem for government and not us. We will wait and watch for another 3-6 months and if smuggling activities rise then we will again approach the finance minister in this regard," Bamalwa said.
The jewellers had gone on a 21-day nation-wide strike beginning March 17 protesting against the budget proposal of an excise duty of 1 per cent on unbranded jewellery.
The strike was withdrawn after an assurance from Mukherjee that their demand would be considered during the passage of Finance Bill.
"The government has decided to withdraw the levy (one per cent excise duty) on all precious metal jewellery, branded or unbranded, with effect from March 17, 2012," Mukherjee announced in the Lok Sabha.
Reacting on the development, Gitanjali Group Chairman and Managing Director Mehul Choksi said it was very difficult to keep track of all paper work in our sector, which is very ancient.
On Tax Deducted at Source (TDS), he said it is not fair to apply it only on the gems and jewellery sector as cash dealing takes place in many other sectors.
Talking about no roll back of customs duty, he said it's not going to affect the industry, but the government might lose out on revenue due to illegal activities.
Bombay Bullion Association President Prithivraj Kothari said the rollback of excise duty and raising the TDS for cash purchase of jewellery to Rs 5 lakh, from Rs 2 lakh, were good decisions by the finance minister.
Gems and Jewellery Export Promotion Council (GJEPC) Chairman Rajiv Jain said, "The finance minister understood the problems of this sector and took this decision ... If the domestic industry grows, then it will ultimately help the exports as well."
"This is the right time to encourage the sector and to develop brands, which after establishing in the domestic market, can also be exported," he added.