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GJEPC Signals Concern Over India's Union Budget

India's recently announced budget has raised concerns among the leaders within the country's gem and jewelry sector, the Gems & Jewellery Export Promotion Council (GJEPC) said in a statement released Wednesday.

At a time in which the Indian market faces the growing influence of a highly competitive China, a worldwide decline in demand and increasing unemployment, the GJEPC has noted areas where the new budget has negatively impacted the Indian diamond and jewelry sector. These include the high interest rates attached to domestic funding, which the GJEPC asserts should be facilitated at internationally competitive rates.

Also, an increase of duty on gold and silver will hurt smaller exporters who buy gold from the market, the GJEPC said.

The GJEPC, which represents 5,500 members, made a number of recommendations that were overlooked by the budget entirely. These include a request of at least $3-4 billion, financed by country's foreign exchange reserves, to increase dollar liquidity as well as a proposal for a flat 1 percent turnover tax to replace the current system of direct taxes. According to the GJEPC, he current taxation scheme is "arbitrary" and detrimental to finalizing tax returns on time.

Some areas in the budget were welcomed though, such as the service tax exemption for exporters, the withdrawal of import duty on rough coral and the abolition of an excise duty on branded jewelry.