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'Budget incentives will not help'

Rajesh Bhayani  |  Mumbai 

Sanjay Kothari, Chairman, Gem & Jewellery Export Promotion Council, tells Rajesh Bhayani that incentives offered in the Budget won't help in making Mumbai the hub for diamond industry.
How will the Budget help in making Mumbai an international diamond industry hub?
The government has reduced import duty on cut and polished diamond from 5 per cent to 3 per cent and offered presumptive tax for income tax purpose. I believe these incentives are not workable.
If we have to promote India as a diamond trading hub and want importers to come to India instead of Belgium, Israel or Dubai than we should have encouraging tax regime there.
We need to ensure that manufacturers from other countries come here for selling, while mining companies sell rough diamonds here. Unfortunately, the incentives announced in the Budget won't help the industry's cause.
What was the industry's demand?
We wanted import duty to be abolished and turnover tax or presumptive tax be calculated taking into account 3 per cent as profit of total turnover. The 3 per cent is based on our survey of leading exporters, accounting for 30 per cent share in total exports.
At 8 per cent profit assumption, nobody will opt for the option and the scheme of presumptive taxation will remain on paper.
Diamond cutters of Surat and Amreli are also favouring the scheme and we made all efforts to provide full information on profitability of the companies to the government. We are sure that the finance minister has accepted in principal that the industry deserve incentives.
Other concessions for synthetic diamonds and coral as well as the remarks in the Budget speech suggest that the Centre understands the situation. We will shortly make a fresh representation to the ministry.
What kind of export growth are you looking at for in current financial year?
We may not be able to repeat the growth seen in the recent past. We will be happy if we can achieve exports of $17 billion. We have reached a saturation point in exports of diamonds as profit is low and see jewellery as our export drive.
How is the raw material scenario?
Leading diamond supplier, Diamond Trading Corporation, raised prices recently.
Since we have put in huge manufacturing capacities, demand continues. Given the situation, mining companies are making more money than our manufacturers.

First Published: Mon, March 05 2007. 00:00 IST