Industry expects focus on farmers to spur gold demand
But the industry is a bit disappointed with the status quo on customs duty on the yellow metal. It has lobbied hard for getting customs duty halved from the present 12.5 per cent.
"We welcome the move to boost agriculture that will increase farmers income and bring in liquidity and purchasing power to the retail industry, including the gems & jewellery sector," All-India Gem & Jewellery Domestic Council chairman Anantha Padmanaban told .
Disappointed with no changes on the duty front, he said, "we have been pursuing the government to reduce customs duty on gold to 6 per cent from the current 12.5 per cent to kill the gray market and boost the organized trade".
On the proposed bullion exchange, he said, the industry welcomes the move, but needs to study the details.
Commenting on the budget, the World Gold Council India managing director Somasundaram PR said measures to boost farmers income and reduce taxes for the middle class will boost purchasing power and consumer confidence, which will benefit the jewellery industry.
"Focus on the next wave of digital revolution will add impetus to digital gold products. The unmistakable thrust towards transparency sets long-term direction for the trade which will see many policy and market-led changes," he added.
Further, the plan to establish an international bullion exchange in Gift City is a positive step towards making gold a mainstream asset class.
"With its unique locational, infrastructural and regulatory advantages, the IFSC is well placed to build a fair, efficient and transparent bullion trading ecosystem. An organised bullion trading system will benefit the entire supply chain particularly, small players and exporters," he opined.
PNG Jewellers chairman Saurabh Gadgil said the announcement of the bullion exchange is interesting.
"The budget seems to be a very strategic and long term but no cognisance has been taken of problems on the ground. The only silver lining is the sops announced for the farming sector," he added.
Overall, the industry's request for reduction of import duty and other sops to increase consumption have gone unheard and that is disappointing, he said.
Manufacturers and exporters, however, are disappointed with the budget as there is increase in basic customs duty on diamonds, coloured gems, stones and semi-precious stones.
According to Gem Jewellery Export Promotion Council vice-chairman Colin Shah, these measures will increase the cost and ease of doing business and impact exports by minimum 5 per cent.
Basic customs duty on rubies, emeralds and sapphires, unset and imported uncut increased from nil to 0.5 per cent, duty on rough coloured gemstones increased from nil to 0.5 per cent.
Customs duty on pre-forms of precious and semi- precious stones and on rough synthetic gemstones increased from nil to 0.5 per cent as well.