GEMS AND JEWELLERY

Introduction
The Gems and Jewellery sector plays a significant role of 6-7 per
cent of the countrys GDP in the Indian economy.
One of the fastest growing sectors, it is extremely export oriented
and labour intensive.
The Government of India has declared the Gems and Jewellery
sector as a focus area for export promotion.
India is deemed to be the hub of the global jewellery market
because of its low costs and availability of high-skilled labour.
India exports 95 per cent of the worlds diamonds, as per statistics
from the Gems and Jewellery Export promotion Council (GJEPC).
The Indian government presently allows 100 per cent Foreign Direct
Investment (FDI)
 Government Initiatives

The Government of India, offered tax cuts for the

middle class and other sections of society (5 per
cent for the Rs 250,000-500,000 tax slab; which
was 10 per cent initially).
The Government of Indias proposal to cut
corporate tax rates to 25 per cent for micro, small
and medium enterprises (MSMEs) having annual
turnover up to Rs 50 crore (US$ 7.5 million) will
benefit a large number of gems and jewellery
exporters from MSME category.
 Gems and jewellery Industry in India
Net Gems and Jewellery exports for 2015-16 was to the
tune of US$ 32 bn as compared to US$ 36.2 bn in 2014-15
In terms of segments, exports for 2015-16 were as follows:
Cut and polished diamonds: US $ 20 bn, Gold Medallions
and coins: US$ 5.2 bn, Silver Jewellery: US$ 3 bn
The fall in exports have been due to slowdown in global
economy and lack of demand for luxury good
The export performance for current year is also expected to
be under pressure, though improvement of business
sentiment would exist in America, which is the worlds
largest consumer ; as well as 50 per cent of Indias diamond
jewellery production
 Commerce Ministry Favours
'Restriction Free' Gold Imports
Commerce and Industry Minister Nirmala Sitharaman has pitched for
'restriction free' imports of gold to help gems and jewellery exports and
also discourage smuggling.
 CONT..
Commerce and Industry Minister Nirmala Sitharaman has pitched for
'restriction free' imports of gold to help gems and jewellery exports and
also discourage smuggling.

While restrictions on gold imports can be justified on the grounds of

maintaining the balance of payments (BoP), one has to be mindful of the
fact that such barriers encourage smuggling, she said.

The minister further said that custom authorities have confiscated a huge
haul of smuggled gold in places like Delhi, Kochi and Chennai.

"So while from BoP point of view, it is nice, but restrictions are also leading
to these kinds of channels which are unwanted and undesirable,"
Sitharaman told PTI.

"Ideally, I would like to see it free of restrictions," she added.

The imported gold is mainly used by gems and jewellery exporters and
people usually consider investment in the precious metal as safe haven.
 Government targets $60 billion gems
and jewellery exports by 2022
The government hopes the gems and jewellery sector to grow 6-7
per cent per annum and has set at target of $60 billion exports by
2022 from the present $43 billion.
 CONT
"We want to explore new markets for jewellery and diamond exports for which
process is on," Dwivedi said.

Praveenshankar Pandya, chairman, GJEPC, said that having crossed the $40 billion
exports mark, the trade body is now devising a strategy named Vision 2022 to
enable India attain global leadership position in gems and jewellery.

"We have set the exports target of $60 billion by 2022 and $80 billion by 2025. The
trend this year is good and we target growth of 10 percent in the current year. We
will be happy to register $47 billion exports this year, he said.

On the sidelines of IIJS 2017, GJEPC also signed a MoU with Diamond Producers
Association (DPA) to support the miner-backed group's international diamond-
jewelry promotion efforts. The industry will be spending $200 million for the
promotions of the trade across the globe and India may get share of around $5
million for the promotions, Pandya added.

Meanwhile, India International Jewellery Show, a five-day B2B event which opened
today, is expected to provide business opportunity to explore the various multi-
faceted aspects of the industry. The event witnessed more than 870 exhibitors
participation, which includes participation from 30 countries.
 CONT
"We are hopeful of country's gems and jewellery exports to touch $60 billion by
2022 and expect 6 to 7 per cent growth in exports annually," Department of
Commerce Joint Secretary Manoj Dwivedi told reporters on the sidelines of a
jewellery show here.

India exported gems & jewellery worth $43.2 billion during fiscal 2017, a rise of
nearly 10 per cent over the previous fiscal's export figure of $39.2 billion.

After inaugurating 34th edition of the India International Jewellery Show, IIJS 2017,
Dwivedi said, "the jewellery industry needs to achieve a higher scale of
achievement in the coming years in order to become globally competitive and
promote jewellery exports".
"The government is making various policy initiatives to find out ways and mean to
improve this sector since it is only sector having maximum employment
opportunities to both skilled and unskilled workers pan India," he added.

Although the downward trend witnessed in the global markets, the country's gems
and jewellery exports showed upward trend, which is very positive sign, he said.
 Gems & jewellery exports rise 11 pc
during Apri-May
Indias gems and jewellery exports rose by over 11 per cent to USD 6.78 billion during the first two
months of the current fiscal, largely driven by demand in major markets like the US.
In April-May last year, the sectors exports aggregated to USD 6.1 billion, according to the data from
Gems and Jewellery Export Promotion Council (GJEPC).
The labour intensive gems and jewellery sector contribute about 14 per cent to the countrys
overall exports.
The rise in shipments was mainly supported by exports of silver jewellery, and gold medallions and
coins.
Silver exports more than doubled to USD 1.51 billion during April-May 2017 from USD 674.14
million a year ago.
Similarly, shipments of gold medallions and coins registered a growth of about 50 per cent to USD 1
billion during the period under review.
Exports of cut and polished diamonds, coloured gem stones and rough diamonds also reported
positive growth.
Indias main export destinations include Europe, Japan, China and the US.
However, shipments of gold jewellery contracted 35.6 per cent to USD 542.15 million during April-
May 2017.
According to the GJEPC data, imports of rough diamonds rose by about 6 per cent to USD 3.60
billion in April-May 2017.
Imports of gold bars, however, dipped by about 67.28 per cent to USD 300.22 million.
 Recycling or sale of old gold Jewellery to attract GST says
revenue secretary

The sale of old jewellery, whether for the purposes of buying new jewellery or not, will attract GST,
the revenue secretary of the central government, Dr. Hasmukh Adhia has clarified. He was speaking
at GST ki Master Class, a series of sessions broadcast live on government TV and radio channels,
where a team of experts clarified issues relating to the new tax regime.
Dr Adhia said that while direct sale would attract a 3% GST levy on the value, the amount would be
deducted from the GST payable by the customer if s/he purchased new jewellery. Jewellers may
also claim the amount as input tax credit if the gold is used for jewellery sold later to other
customers.
He said that if old jewellery is given to the jeweller for modification, then this would be categorised
as job work and a 5% GST on making charges would be payable.
Scrap gold, the industry term for recycled gold, has contributed a small, but not insignificant
amount to the gold used in jewellery manufacturing in India each year. Last year, World Gold
Council estimated that 89.6 tonnes of gold was recycled, a 12% increase over the 80.2 tonnes in
2015. Traditionally, high gold prices lead to a spurt in recycling.
Reports in sections of the media also indicate that the West Bengal government may be considering
exemption from state goods and services tax (SGST) for the gems and jewellery industry. The
reports say that the waiver would be a continuation of the exemption from Value Added Tax (VAT)
that the industry enjoyed in the state earlier.
However, government officials quoted in the report did not reveal any timeline for the
implementation. Various industry associations have welcomed the possible waiver, saying it would
benefit micro, small and medium enterprises (MSMEs) which constitute the vast majority of
companies in the gem and jewellery manufacturing sector.