With Finance Minister Nirmala Sitharaman announcing a cut in the import duty of cut and polished diamonds and gemstones to 5% from the existing 7.5%, the initial industry reaction is that the move will result in the prices of diamond jewellery and gemstone-studded jewellery coming down.

Moreover, exports of diamond jewellery are also expected to get a fillip. As it is, exports of gems and jewellery have already crossed the pre-COVID levels.

“The reduction of customs duty on cut and polished diamonds from 7.5% to 5% will spur greater demand for natural and real diamonds and also give an opportunity to diamond companies to boost operations and, in turn, contribute to greater economic growth of the nation,” said Sachin Jain, Managing Director, De Beers India.

Added Suvankar Sen, CEO, Senco Gold & Diamonds, “The FM’s announcement of reduction in customs duty on cut and polished diamonds and gemstones and plan to develop a simplified regulatory framework to facilitate export of jewellery through e-commerce are positive steps which will enable the sector to grow in the country and boost exports.” 

The Budget has also provided relief to the Rs 35,000 crore imitation jewellery segment, with the Finance Minister announcing that customs duty of 20%, or Rs 400 per kg, whichever is higher, will be imposed on imitation jewellery. This is set to discourage importers from dumping cheap imitation jewellery in the country.

Other than this, the Budget also reduced customs duty on pearls to 5% from 10%, and on rhodium to 2,5% from the existing 12.5%. Sitharaman also said that to facilitate export of jewellery through e-commerce, simplified regulations will be put in place by June 2022.

Besides, the Emergency Credit Line Guarantee Scheme (ECLGS) has been extended up to March 2023, and the overall outlay has been increased by Rs 50,000 crore. The Budget provisions also allow for surety bonds to be accepted in place of bank guarantees.

Commenting on this, Colin Shah, Chairman, GJEPC, said, “Since more than 90% of the gem & jewellery sector consists of MSMEs, the extension of ECLGS for MSMEs up to March 2023 will be a great relief to the sector, and we are happy that its outlay has been increased by Rs 50,000 crore to a total cover of Rs 5 lakh crore.”