In a ”survival or a rather politically safe” budget, the finance minister had announced one-sided measures to control the forex reserves of the country by making gold and silver dearer for the consumer. It has been mentioned that one of the primary drivers of the current account deficit has been suspected to be the imports of gold and other precious metals in the first three quarters of this year. With the objective of checking this trend for better results, additional duties were announced and some of them have been doubled with the objective of limiting the imports of gold and silver. This has put the entire jewelry industry of India and the 3.5 million people, it directly employs, under great uncertainty for their future vis a vis such policy adopted.
Introduction of levy of excise duty of 1 percent on gold jewelry not bearing a brand name, along with existing 1 percent on branded precious metal jewelry
The Gem & Jewellery Export Promotion Council (GJEPC) earlier had already advised the government that imposition of such excise would be disastrous for the entire jewelry industry of India including exports, as excise is an ambiguous regulatory prerequisite for the Indian jewelers, which is difficult for mid-sized and small jewelers to comply and compete with.
Due to this, the Indian jewelry industry is certainly not averse to contributing in revenue to the government of India in any other form, but excise. The industry believes that there is already a steep rise in import duty of gold from around 1 percent in end 2011 to 4 percent, which though uncalled for and already criticized by GJEPC, has already taxed the industry by four times. With the financial year drawing to a close, such announcement of excise has also seen the exports of gold jewelry from domestic tariff area (DTA) to suffer drastically and create immense hardships for the jewelry exporters and those who also manufacture and trade domestically.
GJEPC has actively engaged with the government to bring clarity to application of such excise rules, which still remain unclear. After the budget was announced on March 16, the GJEPC office bearers met various government officials including the Tax Research Unit of the Finance Department and the Commerce Secretary and are thankful for the time given and sympathetic approach taken by them on the issue and is confident of finding an amicable solution.