Mumbai: The gems and jewellery industry which had sought reduction in the gold import duty as well as abolition of the stringent "80:20 norms", expressed its disappointment with Union Budget on Thursday.
"The entire industry was waiting for a positive turn of events but was let down by the government in its maiden budget," All India Gems and Jewellery Federation (GJF) Chairman Haresh Soni said.
The Union Finance Minister has ignored the plight of the trade despite several representations and meetings by the Federation with the ministry highlighting the severe hardship faced by the industry due to restrictive policy measures of the government during last financial year, he said.
"The 80:20 rule were the biggest impediment for smooth imports and development of premiums on gold, since export relation to imports had no relevance and had built a big parallel economy. "Bringing down customs duty would have also eliminated smuggling and removed involvement of black money," Soni said.
Since the last three years, the sector has been "bleeding" due to stringent measures adopted by the government. The industry would urge the government to end what it called "Gold Control Raj" and rescue the trade from a parallel economy and black marketing, by abolishing the 80.20 rule and reducing import duty on gold, Soni said.
Gem and Jewellery Export Promotion Council Chairman Vipul Shah said the Union Finance Ministry has maintained a "populist front", announcing various small measures and state level schemes, but that none of these promise any major impact on the gems and jewellery sector.
"We are happy that our recommendation to rationalize import duty on broken diamonds and withdrawal of import duty on semi-precious and precious stones have been accepted. Also rationalisation of import duty on processed diamonds to 2.5 per cent will help the domestic manufacturing sector.
However, the jewellery sector is largely disappointed, since the import duty on gold has not been reduced even by 2-3 per cent," Shah said. However, he said the industry has some reason to cheer due to the renewed focus on promotion of exports and reviving Special Economic Zones in the country.
The industry also welcomes the the government's intent to rationalise the direct tax mechanism for faster settlement of tax disputes as this sector is one of the main victims of such disputes, Shah said.
World Gold Council India Managing Director PR Somasundaram said that the Budget has focused on the country's long-term direction and addresses growth and savings. "Though there has been no direct announcement about gold or any reduction in duty, tax incentives for marginal savers attempt to put more money in their hands and this indirectly benefits gold as well," he said.
Gold has been intimately interlinked with Indian society and culture as well as played an integral role in annual household savings, he said. "It is our hope that the short-term curbs on gold, which was understandable at the time they were introduced, but have led to an increase in smuggling, will be reviewed and reversed soon.
"The need of the hour is to stop seeing gold as the problem and instead focus on measures that will unlock the potentially transformative value of gold stored in millions of private hands in order to fund growth," he said.
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