The government on Wednesday announced increase in import duty of 19 items including jewellery and diamond to contain the widening current account deficit.
The import duty for gold is 10 percent, while it is 20 percent for gold jewellery. Last year, gold imports into the country were at 800 tonne amounting to Rs 2 lakh crore and the jewellery imports were at about Rs 10,000-11,000 crore.
On silver, the import duty is 10 percent, while it is 20 percent for silverware. Overall silver imports into the country amounted to about Rs 11 crore.
Semi-processed, half cut, broken, cut, or polished coloured gemstones will now attract a duty of 7.5 percent versus 5 percent.
Colin Shah, vice chairman of GJEPC, hopes the government will re-look at the import duty once the rupee stabilises.
He said, “One of the fundamentals reasons why India became a large diamond hub with manufacturing and trading is because of the tax regime and customs regime that we had a few years back.”
“When the import duty was 0 percent, the diamond manufacturer was able to run his business in a very cost effective manner which helped him to procure rocks at a competitive rate, manufacture in Surat at a competitive rate, and export and run a healthy business. Now, 0 percent became 2.5 percent, became 5 percent, and now became 7.5 percent. So the cost of manufacturing, exporting, and running a diamond business or a coloured gemstone business, out of India, while it is still viable, makes us non-competent against our fellow manufacturing country, especially China,” Shah told CNBC-TV18.
“...The rupee is under pressure, and so they had to take certain measures. We hope that the minute rupee stabilizes or becomes a little stronger or oil corrects, they relook at this because this will impact our trade,” he mentioned.