Excise duty hike may hit consumption of gold, silver jewellery

Local consumption of gold and silver jewellery may decrease owing to the increase in excise and customs duty, a top industry official said.

"The local consumption of gold and silver jewellery may go down owing to the increase in excise duty and this in turn may affect skilled workers in this sector," The Gem and Jewellery Export Promotion Council (GJEPC) Chairman, Vasant Mehta, said while reacting to Budget.

The finance minister also annoucned increase in customs duty on gold and platinum from Rs 200 per 10 grams to Rs 300 per 10 grams.

The 2 per cent of subvention not being extended to the industry would also hurt the sector as the cost of manufacturing would increase as compared to competitor countries, thus affecting the country's exports, Mehta said.

The hike in customs duty on precious metals and increase in the duties on gold and platinum (from Rs 200 per 10 gms to Rs 300) is on par with the rise of prices of these metals. However the hike in duty rates on silver from Rs 1,000 per kg to Rs 1,500 per kg is excessive, Gitanjali Group's Chairman and Managing Director, Mehul Choksi, said here.

The Union Budget has not evoked much cheer as it did not contain much which is specific to the industry on the whole, he said.

Following the recession, the industry needed support, he said, adding, "this industry is on the recovery mode."

"One area where the Budget could have helped the industry was by lowering the rate of presumptive profit under benign tax procedure, which has been our demand for a while now as it would have helped India to truly establish itself as an international hub for diamonds, gems and jewellery," Mehta said.

The sector welcomed measures like the government's commitment to ensuring continued growth of SEZs to draw investments and boost exports and employment.

Continuance with SEZ promotion will help the G&J units in the SEZs, Mehta said.

The announcement of the Finance Minister to develop skilled manpower in the country was welcome, he said, as the sector would benefit from the recently sanctioned funds for the Indian Institute of Gems & Jewellery (IIGJ), Jaipur, under this scheme by the National Skill Development Council.

"The overall thrust of the Budget is positive and it will provide a boost to domestic consumption and growth. The revised tax rates will certainly mean greater disposable income for domestic consumption," Choksi said.

Specific to the gems and jewellery sector, the extension of the interest subvention for another year is welcome. This will provide an important stimulus to the export sector and boost growth and revival after the slowdown of last year, Choksi said.

Choksi welcomed the reduction from 10 per cent to 2 per cent on the import of rhodium which is a raw material used in manufacturing.

"The reduction in the duties on raw gold to Rs 280 per 10 gms is also welcome," Choksi said.