India's Gems and Jewelry Trade Federation Sends Budget Ideas To Finance Minister

(IDEX Online) – The All India Gems and Jewelry Trade Federation (GJF) has urged Finance Minister Shri Arun Jaitley to abolish the 80:20 rule for gold imports which allows only nominated bodies to import gold on condition that 20 percent of the imported shipment is exported.

The GJF is also calling for VAT to be "rationalized" across India's states, and proposes a 1 percent special tax rate for the gems and jewelry sector.

The GJF claims that 80:20 rule is "the biggest impediment for smooth operations of imports and development of premiums on gold as the export relation to imports has no relevance and has built a big parallel economy".

It is also urging the government to bring down the import duty on gold imports to 2 percent from 10 percent. "Bringing down customs duty will eliminate smuggling and remove involvement of any black money."

In a 10-point pre-budget recommendation, GJF Chairman Haresh Soni said the organization expects the new government to act to improve the situation of the gems and jewelry industry.

"Over the past year the jewelry trade has suffered a lot because of the 80:20 rule and 10 percent import duty on gold. These restrictions have been a deterrent for gold imports and distribution. GJF demands that 80:20 must be withdrawn and duty must be brought down to 2 percent. This would help curb the growing black market activities in the trade, gold smuggling and the high premiums on gold and put an end to the monopolized business environment.”

“We recommend the government to earmark funds for development and expansion of the gem and jewelry sector. The GJF will help in utilizing this budget to develop education, technology transfer, marketing, building quality and R&D." He said that budgetary support would assist in providing education and developing infrastructure for modern and hygienic jewelry parks.

GJF Director Ashok Minawala said, “This budget may be turning point for the jewelry industry as we strongly believe that this government is empathetic to the cause of the industry. At present, the industry is suffering from several irrational taxes such as excise duty; tax collected at source, GST, wealth tax and high premium charges on gold from banks. We recommend that banks be allowed to freely issue gold loans capital requirement for industry and such gold loans be permitted to be paid back in ‘gold metal or in cash’. Presently, loans must be paid back only in rupees. This will help rotate the gold better in case of sluggish market conditions.”