India’s G&J industry leaders react to the FM’s Union Budget 2022

The Union Finance Minister Nirmala Sitharaman presented the Union Budget 2022 on February 1. She said that the Budget proposals for this financial year rest on health and well-being, infrastructure, inclusive development, energy transition and climate action, financing of investments and ‘Minimum Government, Maximum Governance. India’s economic growth is estimated at 9.2% to be the highest among all large economies, she said, adding that 60 lakh new jobs will be created under the productivity-linked incentive scheme in 14 sectors.

Reacting to the Union Budget 2022, leaders of the Indian G&J industry commented as below:

Somasundaram PR, Regional CEO, India at World Gold Council said: “The budget is very positive for the Indian Jewellery Industry. The emphasis on exports was evident with the announcement of a simplified regulatory framework to allow the e-commerce export of jewellery. The general policy thrust aimed at higher economic growth is again a tangible benefit for gold, as it is well established that income growth is the single dominant factor in long term gold demand. Digital push, MSME support and infrastructure spending address several industry priorities and offer significant leverage for the industry to play a bigger economic role. This year’s budget, read in the context of the significant traction in the implementation of previous year's announcements on gold, point to a stable, sustained path to reforms over the years. One more reason for the industry to cheer, after the high five for gold in Q4 by customers.”

Sachin Jain, Managing Director, De Beers India opined: “We are pleased with the budget announcement for our sector, particularly the reduction of customs duty on cut and polished diamonds from 7.5% to 5%. This will spur greater demand for natural and real diamonds and also allow diamond companies to boost operations and, in turn, contribute to greater economic growth for the nation. The proposal to create a simplified regulatory framework to enable the use of e-commerce channels to export jewellery will help us seamlessly take forward our initiative to promote trade through the digital mode. This will bring down transaction costs and save time while enabling us to reach out and expand our customer base globally. Overall, we hope that the gems and jewellery sector continues to play a pivotal role in the growth of the economy.” 

Colin Shah, Chairman, GJEPC said: “The Indian gem & jewellery sector is one of the leading contributors to the national economy and the country is the undisputed leader in diamond processing. Reduction in import duty on cut & polished diamonds to 5% will further help in strengthening the sector and retain its leadership position. Since more than 90% of the gem & jewellery sector consists of MSMEs, the extension of the Emergency Credit Line Guarantee Scheme” (ECLGS) for MSMEs up to March 2023 will be a great relief to the sector, and we are happy that its outlay has been increased by ₹50,000 crores to a total cover of ₹5 lakh crores.
Acceptance of personal surety bonds in place of bank guarantee for import of gold will meet our longstanding demand of simplifying duty-free gold availability, especially to the SME exporters of gold jewellery and revive the exports of plain gold jewellery. Surety Bonds in place of Bank Guarantee will be made acceptable to reduce indirect costs for suppliers. This will help gold jewellery exports.”

“The Special Economic Zone (SEZ) Act will be replaced with new legislation that will enable the states to become partners in the development of enterprise and service hubs. This will cover all large existing and new industrial enclaves to optimally utilise the available infrastructure and enhance the competitiveness of exports. An increase in Capital expenditure by 4.1% is good for the impetus of the economy. A composite basic Customs duty rate of 20% or Rs. 400/kg, whichever is higher is being applied on Imitation Jewellery. The Government has been quick to realise the potential of e-commerce and has proposed to implement a simplified regulatory framework by June 2022 to facilitate gem & jewellery exports through the e-commerce route, ensuring that jewellers from every district in the country can ship their products overseas in a fast and economical manner. This is the need of the hour as the e-commerce sales of jewellery are growing exponentially in the US and the consuming markets. The broad basing of the exports through this measure have the potential to grow the exports from this sector to USD 100 billion in the next 5 years.”

“The announcement of the honourable Finance Minister in bringing a new SEZ regime by changing the SEZ Act is another big relief for our sector as the exports from SEZ are growing at a rapid pace and have the potential of getting FDI in manufacturing and exports of jewellery from SEZ and take the country’s exports to one trillion dollars within the next three years,” he added.

Ashish Pethe, Chairman, All India Gem & Jewellery Domestic Council (GJC) said: “The Union Budget 2022-23 is well-balanced, as the Government is focusing on development, though we were expecting some action on Bullion exchanges and a reduction in Gold Import Duty and GST. However, this budget has the potential to uplift the spending power of rural India by giving them impetus through Govt spending. This will ultimately increase the rural income and help the G&J sector since 60% of the gold demand comes from rural India. We are happy with the reduction in Import duties of cut & polished diamonds, sawn goods, pearls, colour stones. Easing out procedures of eCommerce will also support small businesses and improve exports, as now even the small jeweller will be able to take benefit of the online portals for business. ECGLS scheme extension till March 2023 is a big sigh of relief and an increased outlay by 50,000 crores will help most of the small & medium Jewellers as a majority of the industry falls under MSME.”

Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished