Industry welcomes Budget 2018-19

Proposed agricultural reforms in rural sector likely to boost jewellery sales: Nitin Khandelwal

Mumbai: Budget 2018-19 has been largely positive to the gold and jewellery industry with the vital announcements of streamlining gold exchange, simplification of gold monetisation scheme and introduction of gold policy. However, the hike in custom duty for imported jewellery (gold, silver and artificial) from 15% to 20% will make imported jewellery costlier in the domestic market, although the decision aims to protect local manufacturers. The Retail Jeweller gets in touch with industry experts for their reaction to the Budget.

In his response to the Budget, World Gold Council (India) managing director Somasundaram PR said, “The government’s announcement that it will formulate a comprehensive gold policy to establish gold as an asset class is ground-breaking. The establishment of regulated gold exchanges is exceptionally positive towards making gold a mainstream national value-added asset. A stable policy environment and a fair and effective trading market will bring much-needed transparency and stability.”

GJF chairman Nitin Khandelwal said, “The government has made excellent reforms for agriculture and rural sector which is one of the highest contributors to the GDP of our country. These reforms will empower rural consumer through improved earnings. This will in turn help the jewellery sales in rural sector. The proposed comprehensive gold policy, gold spot exchange and gold deposit account will be very beneficial for the industry. We also welcome the reduction in corporate tax to 25% for companies with turnover of over Rs 250 crores.”

Gem & Jewellery Export Promotion Council (GJEPC) chairman Pramod Agarwal expressed disappointment in the government’s decision to increase customs duty on cut and polished diamonds and coloured gemstones from 2.5% to 5%. “This move hampers India’s chances of becoming an international diamond trading hub. This move doesn’t provide India a level playing field vis-à-vis other peers such as Belgium, Dubai and Israel. It will also have a negative impact on the Shut Out business from the US, which has been a fast growing segment,” he said.

Lala Jugal Kishore Jewellers director Tanya Rastogi glorified the budget in the light of the pre-budget pre-budget reduction of GST on loose diamonds and coloured stones from 3% to 0.25%. “As expected, the budget has been a populous one with focus sectors being rural, agriculture and social sectors. The initiative for employment generation through Make in India and reduction of corporate taxes for MSMEs with turnover upto Rs 250 crores is highly appreciated by our industry as the advantages should spill over to the retail sectors. Especially the focus towards rural sector is commendable and it is also a boost for our industry as 70% of our goods are consumed rurally. However, the rise in custom duties on diamonds & gemstones from 2.5% to 5% is a point of hindrance to the industry”.

Mr Sreedhar GV, director and former chairman of GJF, said, “The government has been very assertive on the demands from the jewellery sector and have heard our voices. Gold monetisation scheme was a request which the industry demanded and we are happy that government will soon revamp the existing gold monetisation scheme.”

According to Saurabh Gadgil, national vice president of Indian Bullion and Jewellers Association (IBJA), the budget is taking the economy in the right direction. “The Union Budget FY 18-19 seems to be in the right direction. This budget has given a clear indication that the ministry feels it is time to clean and organise the gems and jewellery industry by introducing the best practices proposed by Indian Bullion and Jewellers Association. The budget has announced to make provisions for gold spot exchange, gold deposit account, restructuring of gold monetisation scheme and a comprehensive mines-to-market gold policy. Furthermore, the government has welcomed digital payments and has furthered the initiative with Aadhar-based cashless payments. The gems and jewellery industry was deeply stung by multiple issues in the past years and this budget has many positives. We are hoping this budget will bring about the required confidence in the economy and benefit the industry in the long run,” said Gadgil, chairman & managing director of P.N. Gadgil Jewellers.

Kalyan Jewellers chairman & MD TS Kalyanaraman said the estimated growth of GDP to 7.2-7.5% in the second half of 2018 should help boost consumer demand and give a positive momentum to gold and jewellery sales. “The positive focus on the rural economy is expected to benefit the farmers with more disposable income which also augurs well for the industry. The emphasis on healthcare, infrastructure and education will support the growth in the social sector. The issue of import duty on gold has not been addressed in the budget, and we hope that it is considered to give a fillip to the domestic industry,” he maintained.

Sanjeev Agarwal, CEO, Gitanjali Exports Corporations Ltd. said the government has realised the potential of gold and jewellery sector in the area of job creation and exports, long after gold import was liberalized in 1999. “The proposal to set up a gold spot exchange is long overdue and a very positive step to bring transparency in the bullion trade. With regards to the gold monetisation scheme, FICCI has made a number of presentations on the changes needed to be done to make the scheme more effective and would continue to give inputs to the government to improve the gold monetisation scheme,” he added.

Pristine Fire founder and CEO Sunay Gandhi said, “While the customs duty on cut and polished coloured gemstones and diamonds has gone up to 5%, we are looking for a positive outcome from the budget since the government has announced the formulation of a comprehensive gold policy to develop gold as an asset class. Gold exchange is also expected to be regulated by the federal government. The gold monetization scheme will be revamped so that people can open gold deposit accounts in a hassle-free manner. These provisions are expected to promote buying and investing in gold jewellery. However with 60 percent of gold demand coming from rural India, the budget’s focus on boosting rural and farm incomes could benefit us.”

Courtesy: Retail Jeweller India News Service