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As per the Gem & Jewellery Export Promotion Council (GJEPC), the gold export of India saw a fall of 13% in the eleven months since the GST (Goods and Services tax) regime rolled out.
GJEPC chairman Pramod Agrawal told that “The government has given relief to nominated agencies for not paying IGST (integrated GST) upfront on gold import on submission of bond. But 3% GST still applies to exporters for procuring gold from nominated agencies. This is hampering gold jewelry exports from India.”
From July 2017, 10% import duty is charged on gold apart from the 3% GST. As per the jewelers, this 3% GST is a major reason for less gold purchases by the NRI class.
Nitin Khandelwal, Chairman, All India Gem and Jewellery Domestic Council told that “The NRI business is down more than 60% since GST was rolled out. They are looking at other countries for purchasing gold as they are getting the yellow metal at a cheaper rate there than in India. High-value gold and diamond jewelry are witnessing a slow movement as there is liquidity crisis in the market. Moreover, since the sowing season is underway, demand from rural India is not very strong.”
The GST on diamonds was cut down from 3% to 0.25% which led to an increase in export of cut and polished diamonds from the country. India is annually exporting nearly $41 billion of gem and jewelry that is about 7% of the country’s GDP and 15% of merchandise exports.
GJEPC Chairman told that “GST will definitely have a positive impact in the long run and we hope that the government will expedite the refund processes as the industry is facing the issue of non-realisation of GST paid, which, in turn, is locking up working capital.”