February 24, 2010 10:20 AM- Budget news on budget expectations by gems and jewelry sector of India

The Union Budget 2010-11 has to be presented by the Indian Finance Minister on 26th February, 2010- just two days from now. The gems and jewellery sector has high expectations from budget 2010 in view of the setback that the gems and jewellery industry has experienced due to the global economic slow down in FY 09-10 that led to severely muted demands. The jewellery industry in India, which is the world's largest manufacturing center for gems and jewellery, contributes over 12% to the total export earnings and employs highly skilled 1.5 million workers. The industry has presented its wish-list or budget expectations to the Indian Finance Minister as mentioned here under

• The gems and jewellery industry should be allowed to import gold under open general license (OGL) and zero duty on gold imports. Gold imports under OGL must be allowed to any member of the All India Gems and Jewellery Development Council (the nodal official quasi Government body) having a certain annual revenue-earning or greater than Rs 50-crore.
• Zero duty on gold imports should be introduced to divert the world trade towards India. This will let the Indian importers to import gold, scrap gold and then set up refineries to refine the gold and supply it to domestic trade and re-export further.
• In view of collapsed activities in Dubai, government should make a brand 'India Bar' gold on the lines of Emirates or Swiss bars.
• If the government does not bring down the duty, it is expected in the budget to provide for allocating 25% of the duty so collected to be used to improve the gems and jewellery trade.
• Rs 350-crore should be allocated for setting up jewellery parks in order to rehabilitate craftsmen from city centers and unhygienic buildings to scientifically-planned buildings and parks having facilities for good manufacturing, testing, hallmarking, bullion banks, safekeeping and shared machine shops, etc.
• Rs 75-crore should be allocated for a national festival for world-wide publicity of India's jewellery trade.
• ID cards in the form of smart cards should be allowed for making transit of jewellery easy and safe across country. It will also avoid the harassment, bribery and hardships faced by the trade in transporting the precious cargo in India.
• A reduction in bank (interest) rates for working capital at a sub-8 per cent level from the existing 11-12 per cent per annum has also been sought by the gems and jewellery sector from budget 2010. The bank interest rates for gold loans should also be reduced to 2.50% from the existing 4.50% per annum.
• The economic stimulus package for exporters should be extended. Interest subvention of 2% could be extended for a further period as the economic slowdown in global markets continues to impact the export industry.
• The Search & Seizure provisions of proposed Direct Tax Code should be withdrawn because seizure of raw materials hamper continuation of business.
• Exporters in SEZs should be permitted to send some part of their product to the domestic market by paying appropriate duties on raw materials without tax on labor costs. The definition of jewellery SEZ should be broadened to include all accessories that are manufactured with precious metals or studded with diamonds and other precious stones and gemstones.
• Machinery imports for jewellery units should be made duty free.
• Government should make sure about the easy availability of dollar finance available at LIBOR + 1% to be on par with other international centers of gem and jewellery industry. Current rates of 3-4% above LIBOR make Indian industry non-competitive.
• Keeping in view the global economic slowdown and the hardships faced by exporters, IT Exemption U/s 10A / 10B / 10AA of Income tax Act should be extended beyond March 2010.

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