The Narendra Modi-led government's commitment to domestic manufacturing and export sectors is evident from several industry-specific measures in the Budget. While Finance Minister Arun Jaitley has not given in to the gems and jewellery industry's clamour for lower import prices on gold, he did his bit to protect the diamond industry.
The minister levied a 2.5 per cent import duty on semi-processed, half cut and broken diamonds; and increased customs duty on cut, polished diamonds and coloured gemstones from two per cent to 2.5 per cent.
To encourage exports, pre-forms of precious and semi-precious stones are fully exempted from basic customs duty.
Shreyas Doshi, chairman and MD, Shrenuj & Co, said, "The increase in import duty on polished diamonds will further resist the growth of Indian market to emerge as a trading centre. We believe that this will benefit Dubai and Hong Kong to attract the trading community at the cost of India."
However, gold jumped up to three per cent in the futures market in the afternoon trade on Thursday on the Multi Commodities Exchange, as Jaitley did not rationalise the import duty on the yellow metal.
Gold price for August contract on MCX shot up by three per cent to Rs 28,550 per 10g. Bullion traders and jewellery industry was awaiting a two per cent duty cut on gold import, but that didn't happen.
The jewellery industry was convinced by Modi's industry-friendly steps in the recent past and hoped the finance minister would rationalise gold import duty from the existing 10 per cent to two per cent.
"In our interaction, the finance minister had assured us to take industry-friendly measures. But, he had said current account deficit (CAD) is a larger issue that affects every citizen of the country. The FM had promised to take a holistic view before considering the gold import duty. Hence, we were not expecting any duty cut, which will continue to hit small jewellery manufacturing units very hard," said Vipul Shah, chairman of the Gems and Jewellery Export Promotion Council.