Wednesday, July 2, 2014

All India Gems & Jewellery Trade Federation: Pre-Budget Recommendations

All India Gems & Jewellery Trade Federation: Pre-Budget Recommendation
Abolish 80:20 Scheme; Cut Import Duty to 2% immediately,Rationalise VAT across States; Propose 1% special rate for gems & jewellery sector, Lift limit of Rs. 20,000/- cash payment for purchase of gold from domestic households to Rs. 1,00,000/- to facilitate unlocking of idle gold in households


Mumbai, July 1, 2014: 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) sector across India, has urged Union Finance
 Minister Shri Arun Jaitley to abolish 80:20 rule for gold import, which
 allows only the nominated agencies to import gold on the condition 
that 20 per cent of the imported shipment will be exported. 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. GJF also
 urged the Government to bring down the import duty on gold imports
 to 2% from current level of 10%. Bringing down customs duty will
 eliminate smuggling and remove involvement of any black money.

In a 10-point pre-budget recommendation, Mr. Haresh Soni, Chairman, 
GJF, said, “As per government  slogan- ‘Acche Din Aane Wale Hai’, we 
expect the new government to bring good days for the gems & jewellery 
industry by acting on GJF’s  recommendations. Over the past one year
 the jewellery trade has suffered a lot because of 80:20 rule and 10% import
 duty on gold.  These restrictions have been deterrent for gold imports 
and distribution. GJF demands that the 80:20 must be withdrawn and duty 
must be brought down to 2%. This would help curb the growing black 
marketing activities in the trade, goldsmuggling and high premium on gold
 and put an end to monopolized business environment.”

Making specific recommendations for the development of the Indian jewellery 
sector, Mr. Soni further said, “We recommend the government to earmark 
funds for development and expansion of the gem & jewellery sector. GJF will 
help in utilizing this Budget to develop education, technology transfer, 
marketing, building quality and R&D. Also allocation of budgetary support
 to the tune of Rs. 350 crore would go a long way to provide education and 
develop infrastructure facility for jewellery parks to re-habilitate craftsman
 working in unhygienic environments, and bring them into organized ambit.” 

Mr. C. Vinod Hayagriv, Past Chairman, GJF, said, “We expect the government 
to be business friendly. We have requested for reducing import duty on gold, 
relaxation of 80:20 rule, enhancement of TCS to help growth of more organised 
business in our sector, to help unlock idle gold through the Rashtriya Swarn Nivesh
 (RSN) programme. We recommend that the levy of 1% TCS for cash transactions 
of over Rs. 5 lakh should be abolished as it is hurting retail transactions. As there
 is already a VAT and we suggest that only a PAN card requirement be required 
rather than 1% additional levy. We recommend that the limit for PAN card be 
raised to Rs. 10 lakh.”

With favorable expectations from the Government, Mr. Ashok Minawala, Director,
GJF, said, “This Budget may be turning point for the jewellery 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.”

GJF also recommended maintenance of 10% difference between import duties
 on finished gold/silver jewellery compared with raw material to discourage 
cheap low quality jewellery entering into Indian market. While suggesting 
rationalization of VAT across all states, Federation’s demand is to abolish the 
wealth tax with immediate effect.

To incentivize the jewellery sector for enhancing sales and increase
 foreign exchange earnings, GJF recommended a series of measures
 which include providing low cost loans and allocation of land/ 
building to set up jewellery parks (accommodating manufacture, shared 
services, testing, banking, logistic support, etc.) so as to move the sector
 into organized environments, for old and new jewellery 
manufacturing/exporting projects. Further, the Federation made 
specific suggestions like providing subsidized finance for technology 
upgradation and exemptions of capital gains for investment in jewellery
 to encourage and positive growth for the Gems & Jewellery Sector and
 more importantly unlock idle gold reserves in India. GJF also requested
 the Government to instruct to remove & roll back and close erroneous 
pending cases of Excise duty on ‘articles’ of precious metals which has been
pending for a long time.

“We do see big possibility to unlock a great deal of idle gold in India 
through jewelers and banks.  We wish to make a presentation of the 
gold deposit scheme “Suvarna Nivesh Yojna” programme, which the
 previous regime was happy but could not decide upon, as this will help
 us unlock idle gold lying with public and institutions,” GJF’s Board
 proposed to the Government.

About GJF:  GJF is the national nodal and the largest single
 trade body in India for the promotion and growth of trade in gems
 and jewellery across India. It 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 industry size is 
estimated to be in the region of Rs. 4,00,000 crore. 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.






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