The 2023 Union Budget fell short of its expectations for the gem and jewellery industry. While the fillip given to the lab-grown diamond sector was welcomed wholeheartedly, the industry was expecting duty reductions for precious metals and gemstones. Here are some key reactions to the Union Budget.
Somasundaram PR, Regional CEO, India at World Gold Council
While the reduction in Customs duty on gold from 12.5% to 10% is a step in the right direction, the hike in the Agriculture Infrastructure & Development Cess has brought the overall duty to 15%, same as before. High taxes will impede efforts to make gold an asset class, particularly at a time when gold prices have risen globally. Moreover, the thriving grey market has diluted efforts to reduce cash transactions and penalizes organised and compliant players.
Amit Pratihari, Vice President, De Beers Forevermark
The overall budget has a positive sentiment. In fact, under the new tax regime, the budget has made room for more disposable income and purchasing power of consumers will increase. For natural diamonds, we’ve seen an encouraging trend over the past few months where consumers are purchasing items which hold meaning and value. Natural diamonds continue to be sought after due to their inherent preciousness. Pricing has also remained steady, and we are optimistic it will become stronger. As customers continue to value what is natural and genuine, diamonds will always be in demand.
Colin Shah, MD, Kama Jewelry
It was a mixed budget for the gems and jewellery industry as the FM did acknowledge the potential of the lab-grown diamonds for exports, and to create employment. An R&D grant for five years will help in creating local manufacturing capacities, thereby reducing our dependency on imports of machinery in the years to come.
The move to not impose any capital gains on the conversion of physical gold to electronic gold receipts and vice versa will help further gold monetisation. This announcement may help in reducing the import of gold.
The hike in basic Customs duty on articles made from gold bars and import duty on silver will lead to a rise in the final price of locally made jewellery and maybe challenging for the local refineries.
There was no announcement for the natural diamond industry in terms of duties and our SNZs. Not having a repair policy will also be damaging for our DTA Jewellery exporters.
On a positive note, the budget also announced that the conversion of physical gold to Electronic Gold Receipt will not attract any capital gains. Thus, providing an overall digital boost to the industry and promoting investments in electronic equivalent of gold. Directionally, this year’s budget can be considered positive for the industry.”
Parag Shah, Director, KISNA Diamond and Gold Jewellery
This is a step in the right direction. We see the impetus on lab-grown diamonds as an overall positive for fashion accessories segment and industrial usage. Natural diamonds hold their charm for the jewellery segment given the high resale and emotional values associated with it.
Dr. Saurabh Gadgil, Chairman and Managing Director, PNG Jewellers.
For the jewellery industry, the biggest disappointment is that the budget did not address the concerns over reduction in import duty on gold and the creation of a level playing field in prices between the regular market and grey market. In fact, silver has been brought on parity with gold and platinum at 15%. The focus of the government continues on supporting new technologies and the nascent lab-grown diamond industry that is viewed as a sector that may boost the employment rate. The government has also placed impetus on promoting lab-grown diamonds as it is seen as a green initiative through the reduction in basic Customs duty on seeds. What kind of impact this will have on consumers over all as well as the natural diamond industry remains to be seen.
The government has also announced that conversion of physical gold into digital gold will not attract capital gains tax which is likely to promote digital gold initiatives. Besides that, there is nothing major for the jewellery industry.
With the implementation of the revised income tax slabs, there will be more disposable income for people and will ensure that consumption further increases this year, thereby propelling GDP growth.
Bhavik Chinai, Group CEO, BVC Logistics
The overall budget 2023-24 has been neutral towards business and positive towards individuals. The announcement to develop 50 new airports and helipads will, in the future, make secure logistics significantly faster and safer. The huge infrastructure investment bumped up to Rs. 10,000 crore by 33% will have a positive cascading effect on all industries, provide more employment and thereby increase circulation of money in the economy. The reduction in import duty on seeds for lab- grown diamond manufacturing will accelerate India’s rise to a global manufacturing leader in the entire diamond industry, lab grown as well as natural.
Other ease of doing business initiatives like making PAN the universal company identifier, reducing compliances and more commissioners for faster dispute resolution are highly positive for improvement in day-to-day functioning for businesses. For the logistics & jewellery industries, we look forward to implementation of this budget positively.
Aditya Pethe, Director, WHP Jewellers
Overall, as expected the Union Budget was a populist one and it had a lot to offer to the general population. It has supported lab-grown diamonds which will boost the country’s export. The gems and jewellery industry was expecting better incentives, especially a reduction in import duty. There has been an increase in duty for silver, which will hike the prices of the same.
Vaibhav Saraf, Director, Aisshpra Gems & Jewels
As expected, the budget had a lot of positive announcements. Increased infrastructure, health and education spending will improve the economy and connectivity. Agricultural spending, increased loans and rural skill development will ensure economic growth in smaller towns as well. A unified portal for return filing and decriminalization of 3,400 legal provisions will boost the ease of doing business. Lower tax slabs will increase disposable income in hands of consumers leading to higher retail spending.
However, an increase in the import duty of silver and no change in gold duty is a major letdown which is causing a price gap between organised and unorganised markets.
Shrey Mehta, Director, Pooja Diamonds
While there is huge relief for middle class and there are benefits for MSMEs, there is no deductions in duty of gold or diamonds, which the gems and jewellery industry was expecting. In fact, gold and silver will get costlier and that is bound to affect the sales.
Siddharth Surana, Director, RSM India
“India is a major consumer of gold jewellery including plain gold, gold studded with precious stones, diamond studded gold jewellery. Any increase in the custom duties would have a direct impact on the public at large as the jewellers would shift the burden and incidence of higher taxes to the end customers. We would like to emphasise that BCD and AIDC has not been subsumed in the GST regime. Thus, set-off is not available against other indirect tax liabilities such as GST. Thus, for the jewellers who are using gold as a raw material for their ornaments and for creating jewellery, there is no other option but to pass on the hikes in customs duties to the end consumer.”