Quotes that response the Budget!

A transparent trading market required!

Jewellery fraternity on Budget 2019-20

Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman announced her Union Budget 2019-20 proposals and in the context gem & jewellery fraternity reacted over the Budget proposals. Let’s learn choicest views at the juncture!

Somasundaram PR, Managing Director, India, World Gold Council:

“Import duty hike on gold from 10% to 12.5% will negatively impact India’s gold industry. This will impede efforts to make gold as an asset class particularly when gold prices are already rising globally. In addition, the grey market will thrive which will dilute efforts to reduce cash transactions.

Millions of Indians invest in gold as part of their household savings, not simply as discretionary spending for consumption. People buy gold as a long-term investment to protect their wealth and gold also has huge significance socially, emotionally and economically in India.

An increase in duty will be counterproductive to the objectives stated in the previous year’s budget and encapsulated in NITI Aayog’s recommendations for transforming the gold market. We believe that gold can play a positive role in the Indian economy, but to enable this; there needs to be a reduction in overall taxes, a stable policy environment and a transparent trading market.”

Mr. Saurabh Gadgil, CMD, PNG Jewellers; Director and National VP, IBJA:

“The imposition of a hike in customs duty on gold and precious metals will have a dampening effect on the market. However, the push for digitalisation and the shift to a cashless economy will strengthen the hand of organised players in the industry, creating transparency and positively impact market sentiment.

The introduction of zero tax liability for those in the ₹5 lakh income bracket will also align with our expansion in Tier-II and Tier-III markets, and augurs well for the industry as a whole.”

Mr. Shreyansh Kapoor, Vice President, House of Kashi Jewellers:  

“The budget 2019-2020 does not reflect positively on the gems and jewellery industry as import duty on gold is to be hiked to 12.5% from current level of 10% in India which is one of the largest gold importers in the world.

This leads to a huge surge in gold prices which will make gold consumption inaccessible to a great amount for the middle class and an upper-middle-class section of India. We were expecting the gold duty to go down from 10% to 5-6% which would make the jewellery buying pleasant on the pockets of the buyers.

It would have also encouraged parallel trade as there is a huge difference between international and Indian rates resulting in a buyer preferring international markets over us.

 Additionally, we hope in future the government will be helpful in encouraging manufacturers and exporters in gold industry as it positively impacts Foreign exchange for India. Gold and Diamond Jewellery Manufacturing has to be encouraged for both Exports and Domestics. New Special Economic Zones (SEZ) should be encouraged and full Tax Exemption for SEZ Exports should be provided”

Mr. Vaibhav Saraf, Director, Aisshpra Gems & Jewels:

Jewellery industry is not happy with this budget. The increase in Custom Duty makes gold sold by organized retailers like us more expensive which encourages customers to buy from unorganized jewellers and traders. This does not only discourage the organized retail but also puts customer at risk of being cheated as they may buy gold that is not hallmarked. We were already paying a high duty on Gold and a 2% hike is going to worsen things for a retailer.

Increase in Fuel Surcharge is another blow on the system. This will lead to rise in prices across sectors making goods expensive and reducing the net disposable income of a layman. On the bright side, the reduction of Tax to 25% for companies with turnover upto 400 Crore is a good move. The budget also focussed on infrastructure, small businesses and digitalization.”

Ms. Vaishali Shah, Director, Rivana Gold & Diamonds:

“Increase in Custom Tariff Duty of Gold from 10% to 12.5% is a bad move. This will affect exports of Gold Jewellery, increase smuggling, and black market.

The Jewellery industry is quite disappointed by the budget. International Tourists, NRI and customers from overseas will not look at buying Indian Jewellery. Increase in Custom Duty will also make an organized retailer more expensive and therefore encouraging unorganized retail.”

Mr Snehal Choksey, Director, Shobha Shringar Jewellers:

The Jewellery industry has been already experiencing a slacky market and increase in custom duty by 2.5% is yet another setback for the jewelers. Over and above, there is an increase in corporate Tax for companies with income above 2 crores by additional 3% and increase of 7% tax on companies with income above 5crore.

The budget isn’t a positive one for the industry. We were hoping for it to kick start the season on a positive note for us!”

Ms. Tanya Rastogi, Director of IBJA, Lala Jugal Kishore Jewellers:  

Despite the industry’s hope of a reduction in duty, it was not really expected as it never made sense that government will reduce by 60% (the demanded reductions) to tackle around 30% loss that it faces due to parallel trading.

The increase in duty from an already high import duty in comparison to most other countries though is a substantial blow to the industry. The duties on gold Doré and silver Doré have also been increased from 9.35% to 11.85% and from 8.5% to 11% respectively.

Last budget was focused on poor class and it was hoped that for this 5-yr plan, the middle class shall also be paid attention to. The entire budget has increased the burden on the tax payers including the middle class without any rewards in return.

The current government has increasingly been deeming and treating Gold as a Luxury sector product, whereas 70% of the annual gold import is consumed by the rural consumer. Gold is the first line of asset that the poor class plans to own & on which the government seems to have not taken into consideration!”