Gems and jewellery sector not happy with budget

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SME Times News Bureau
Union Finance Minister Pranab Mukherjee's proposal to increase customs duty on gold and silver has failed to excite the gems and jewellery sector that is concerned at not getting any interest relief.

"The prices of precious metals continue to rise. Since the customs duty is levied on these at specific rates, I propose to index the rates as follows: on gold and platinum from Rs.200 per 10 grams to Rs.300 per 10 grams. On silver from Rs.1,000 per kg to Rs.1,500 per kg," Mukherjee said in his budget speech Friday.

Pankaj Parekh, eastern regional chairperson of the Gems and Jewellery Exports Promotion Council, said the hike in customs duty was "not very exciting news".

"Earlier there was a customs duty of Rs.200 for gold, when the price of the yellow metal was Rs.12,000 per 10 grams. Now the duty is Rs.300 when the price of gold is Rs.17,000 per 10 grams. The percentage remains the same," Parekh said.

Parekh said Mukherjee's proposal for rhodium would help the industry.

"Gems and jewellery is a traditional item in our export basket. Rhodium - a precious metal used for polishing jewellery - attracts a basic customs duty of 10 percent. This is being reduced to 2 percent," Mukherjee said.

Parekh expressed his concern at the finance minister not mentioning gems and jewelleries in the interest relief.

"This is not in tune with our expectation," he said.

"The government has provided interest subvention of 2 percent on pre-shipment export credit up to March 31, 2010 for exports in certain sectors. I propose to extend the interest subvention of 2 per cent for one more year for exports covering handicrafts, carpets, handlooms and small and medium enterprises," Mukherjee said.