IIJS Premiere on day three buzzed with an air of optimism as Mr. Piyush Goyal, Hon’ble Minister of Commerce & Industry, addressed the industry in an interactive session at the Launch Pad in Nesco, touching upon recent government policies that sent waves of jubilation through the Indian gem and jewellery sector. Accepting GJEPC’s longstanding demand, Mr. Goyal further announced the government’s landmark decision to reintroduce the Diamond Imprest Licence that had been discontinued in 2009.
The Diamond Imprest Licence allows Indian diamond exporters who meet a certain turnover threshold to import up to 5% (or possibly 10%, as previously) of their average export turnover from the past three years. This aims to level the playing field between small and large diamond exporters, prevent investment from moving to diamond mining locations abroad, and create more jobs in diamond sorting and processing within India.
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Mr. Goyal addressed a full house of gem and jewellery exporters, in the presence of Mr. Vipul Shah, Chairman of GJEPC; Mr. Kirit Bhansali, Vice Chairman of GJEPC; Mr. Dnyaneshwar B. Patil – IAS, Zonal Development Commissioner of SEEPZ SEZ, Mumbai; Mr. Siddharth Mahajan, Joint Secretary of the Ministry of Commerce and Industry, Government of India; Mr. R.K. Mishra; Mr. Nirav Bhansali, Convener of National Exhibitions, GJEPC; Mr. Sabyasachi Ray, Executive Director, GJEPC; as well as trade members, media representatives. TV Anchor Manisha Gupta, Commodities Editor at CNBC TV18, moderated the session with the Minister.
The recent significant reduction in import duty on gold, silver and platinum was the centrepiece of his address, where he elaborated on the government’s rationale and vision behind this substantial policy shift. Key highlights of the interaction included the cut in import duty on gold and silver, which has been hailed as a major boost for the industry. The government’s decision to address long-standing demands has boosted investor confidence. The Minister emphasised the growing importance of the domestic market, which is now poised to offset any potential challenges in the global arena. He said the government is actively engaging with G7 countries to address the issue of the Russian diamond ban. Efforts are underway to safeguard the interests of the Indian diamond industry.
India is also actively pursuing Free Trade Agreements (FTAs) with various countries, aiming to create new opportunities for the gem and jewellery sector. Mr. Goyal encouraged the industry to focus on value addition and intricate designs to compete effectively in the global market.
Minister Goyal revealed that the decision stemmed from the need to make gold and silver more affordable for Indian consumers, while also curbing the incentives for illicit trade.
Mr. Goyal explained, “The import duties on gold, silver, and platinum had reached levels that hurt the domestic industry. By reducing the duty to a reasonable level, we aim to ensure that gold is imported through official channels, benefiting the Indian market and the industry at large.”
The minister also highlighted the broader economic implications of this move. With discretionary spending in developed markets like Europe and the United States under pressure, the Indian domestic market’s robust growth is expected to compensate for the decline in exports to these regions. This move is seen as part of the Modi government’s broader strategy to bolster India’s position as a leading player in the global gem and jewellery sector.
Despite the celebratory mood, Mr. Goyal acknowledged the industry’s concerns, particularly regarding the potential for an increase in GST rates. He urged the industry to remain positive, reassuring them that the government was mindful of their worries and was not planning any immediate hikes.
Another pressing issue discussed was the G7’s ban on Russian diamonds, which has posed significant challenges for the Indian diamond industry. The minister detailed the government’s efforts in negotiating with the G7 countries to find an amicable solution. These efforts have included discussions at the highest levels, with India pushing for the recognition of Mumbai or Surat as centres for diamond certification, similar to Antwerp. Goyal admitted that while the outcome post-March remains uncertain, the government is committed to protecting the interests of the Indian industry.
Mr. Goyal also touched upon the progress of India’s Free Trade Agreements (FTAs) with various countries, which have been pivotal in opening up new markets for Indian goods. The Minister emphasised that India’s current approach to FTAs is one of strength and balance, unlike in the past when deals were often skewed in favour of the other party.
“Today, India is negotiating FTAs with developed nations and emerging markets with high per capita incomes, ensuring that these agreements are fair and beneficial for Indian industries,” Goyal said. He cited the Australia-India FTA as a prime example, where India secured zero-duty access for its goods while protecting sensitive sectors like agriculture and dairy.
The Q&A session that followed Goyal’s address saw industry leaders raising various issues, from the need for duty drawback on platinum exports to concerns about the new ICEGATE system for exports. Goyal assured the audience that their concerns would be addressed and highlighted the government’s ongoing efforts to improve infrastructure and support for the industry.
A notable point was the minister’s mention of the Special Economic Zones (SEZ) Act, which is in its final stages and is expected to provide a significant boost to the industry by fostering a more conducive environment for exports.
In his closing remarks, Mr. Goyal praised the industry for its contributions, particularly in training physically challenged individuals at the Mega CFC, and reiterated the government’s commitment to supporting the sector’s growth. He urged the industry to focus on value addition and innovation to stay competitive in global markets, particularly in the face of evolving consumer preferences in developed countries.
Key Takeaways
- Duty Cut Bonanza: The significant cut in import duty on gold, silver and platinum has been hailed as a major boost for the industry. The government’s decision to address long-standing demands has boosted investor confidence. The need for a duty drawback on platinum exports has also been flagged off with the Finance Ministry.
- Focus on Domestic Market: The minister emphasised the growing importance of the domestic market, which is now poised to offset any potential challenges in the global arena.
- Addressing Global Challenges: The government is actively engaging with G7 countries to address the issue of the Russian diamond ban. Efforts are underway to safeguard the interests of the Indian diamond industry.
- FTA Negotiations: India is actively pursuing Free Trade Agreements (FTAs) with various countries, aiming to create new opportunities for the gem and jewellery sector.
- Value Addition Focus: The industry is encouraged to focus on value addition and intricate designs to compete effectively in the global market.