GJF Hails Union Budget and Gold Related Initiatives but Seeks more Support for Make in India Related Gems & Jewellery Initiatives

• Urges Govt. to reduce gold import duties to curb black money economy

• GST regime welcomed but high service taxes, cess will negatively impact jewellery sales

• Fine print awaited; implementation holds the key to gold monetisation scheme

• Urges Govt. to allow only jewellers; not banks to be allowed to sell Ashoka Chakra gold coins or as investment proposition to consumers to prevent rise in CAD

• More Make in India measures needed for manufacturing & jewellery hub

The All India Gems and Jewellery Trade Federation (GJF), the national trade federation for the promotion and growth of trade in Gems and Jewellery (G&J) Industry across India, has hailed the Union Budget FY2016 presented by Finance Minister Shri Arun Jaitley as progressive growth oriented long term economic blueprint. GJF praised the ‘change in attitude’ of the new Government which has progressively stimulated several positive changes in policy such as abolition of 80:20 Rule; inclusion of the gems & jewellery sector in Make in India programme; and opening of gold loans to the trade. GJF is hopeful that customs duty reduction on gold imports will happen soon as the Government is well aware that higher duties will lead to smuggling which the trade wants to get rid of.

Mr. Haresh Soni, Chairman, GJF said, “GJF welcomes the progressive and pragmatic Union Budget presented by the Finance Minister and we see the Union Budget as an extension of several positive initiatives taken by the Union Government since taking charge. We welcome the change in attitude of the Government towards the gems and jewellery sector, which in turns reciprocates by getting more organised and professional. As part of its ‘Sabka Saath Sabka Vikas’ mantra, we welcome proactive Government measures of introducing the gold monetising scheme and indigenous manufacturing of gold coins with symbol of Ashoka Chakra. Gold monetisation scheme should offer opportunity for inclusive growth of sector which includes banks, jewellers, refiners and traders but we await the fine print. The proposed gradual cut in corporate taxes will benefit listed jewellery companies while the MUDRA Bank will help small-medium jewellery enterprises. The transition to GST regime is welcome but the increase of service tax to 14%, the Swachh Bharat cess will negatively impact jewellery sales. We hope the National Skilling Mission will take up the challenge of enhancing skills of over 2 crore people in the gems and jewellery sector as well as encourage youth entrepreneurs to enter the business.”

Mr. Bacchraj Bamalwa, Director, GJF, said, “The gold monetization scheme is inspired by GJF’s earlier recommendation of Rashtriya Swarna Nivesh (RSN) Scheme, which had been accepted by the government. This is a very positive move and will help control the current account deficit and will allow gold owning depositors to earn interest. GJF hopes that banks will not sell and encourage the consumers to buy Ashoka Chakra coins for investment purpose. If it is done so, the consumption of gold will increase and the current account deficit will widen further. We also welcome the move by the government to abolish wealth tax. This will encourage consumers to buy jewellery and show in their books of accounts.”

Mr. Manish Jain, Vice Chairman, GJF said, “Jewellery should be considered purely as a consumer product and not clubbed with policies impacting gold as a commodity and raw material. Further to the request from the Ministry of Commerce, we hope that Union Finance Minister addresses the important issue of reduction of import duty on gold which has given rise to creation of parallel economy through smuggling of gold and also encourages black money hoarding. While the Minister came up with many ideas for gold as a commodity and raw material, we seek additional stimulus for ‘Make in India’ jewellery. We urge the Government to consider reduction of import duty on machineries and consumables for the jewellery parks. We also seek clustered manufacturing centres with common sharing facility as was discussed during ‘Make in India’ workshop.”

Mr. Ashok Minawala, Director, GJF, “We seek more details on the comprehensive Benami Transactions (Prohibition) Bill, which will be introduced in the current session of the Parliament to achieve the objective of curbing black money. We already HV restrictions of cash payments limits of Rs. 20,000 in URD purchases. We have TCS applicable on sales of bullion on Rs. 2 lakh and on Rs. 5 lakh of jewellery. The new proposal of adding a further restriction of Pan Card on cash sales over Rs. 1 lakh will be discriminating the 70% of the rural buyers of jewellery as they are not under tax net and do not have pan cards. This would not be fair and justifiable under law as it tantamounts to discrimination.”

With respect to ‘Make in India’ initiatives, GJF urges the Government to make the country a global hub by creating many domestic jewellery manufacturing parks where shared infrastructure facilities can reduce overheads and reduce costs to final customers. If the gems & jewellery sector which contributes around 6% to the GDP and 14% of exports (and employs the 2nd largest number of people after the software industry) gets industry statues, then getting land for factory units in Government owned sites such as SEZs/ MIDC areas, etc. will become easier. Manufacturing base in India shall experience huge bounds. Industry status will also facilitate the provision of fiscal incentives, insurance norms and availability of credit. Availing of bank loans and extension of credit limits will become easier. The gems & jewellery sector will have easier borrowings overseas, ability to raise domestic funds through institutional lending, tax-free bonds, tax concessions, credit ratings, etc. Industrial Labour Act rules will apply; and industry status will lead to more employment generation.

GJF has been pursuing with the Government to focus its policy measures on development of the Gems and Jewellery industry and formulate a comprehensive gold policy for India and make India a global jewellery hub. GJF has urged the Government to develop infrastructure to improve skill sets through upgradation and skill development by promoting and standardizing professional vocational courses, introducing fee subsidies, offering scholarship programs, reviving dying arts and crafts, more training. It has sought an increase in investment in technology to improve health and working conditions as well as labour productivity. It has asked the Government to provide adequate thrust for skill and infrastructure development through easy financing, incentives, subsidies, facilitation of land allocation, and supply of utilities. Most of these individuals have learnt on the job and have no any formal training. The intent is to train 4 million (40 lakh) people in the sector till 2022 as the sector is facing shortage of skilled manpower. The industry lost nearly 400,000 skilled manpower post economic recession in 2008, out of which, an estimated half returned while the remaining half migrated to other industries including textile and agriculture farming.

The All India Gems and Jewellery Trade Federation (GJF) represents over 6,00,000 players comprising manufacturers, wholesalers, retailers, distributors, laboratories, gemologists, designers and allied services to the domestic Gems & Jewellery industry. The Gems & Jewellery industry is a hand crafted and labour intensive with over 1 crore strong labour force engaged in the manufacturing of jewellery industry in the domestic sector. The Federation’s mission is to support and promote the progress and prosperity of all the members in the gems and jewellery industry across India. It also provides regular news updated on notifications, rules and regulations declared by the Government. It promotes the trade, by participating in promotional events on a national level. It encourages the trade through the organization of consumer exhibits in India. It also counsels educational and research institutes that help in developing superior quality and high standards for effective functioning of the trade. The gems and gold jewellery business has made significant contribution to the Indian economy and society. The sector has grown phenomenally on the national and international front in the last few years. The industry is in transition phase where family owned entrepreneurial businesses are slowly evolving and transforming into organized professional organizations. Creating a proper policy framework will pave the way for stimulating growth and encouragement.

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