Gem & Jewellery Export Promotion Council (GJEPC), sponsored by the commerce ministry, plans to request the finance minister to roll back the imposition of basic customs duty on rough coloured gemstones and other rough stones on the ground that such stones are used largely for exports with only minuscule domestic consumption.
Budget 2020 raised the BCD on rough coloured gemstones like rubies, sapphires, emerald and other forms of roughs to 0.5 per cent from nil. Pramod Agrawal, chairman, GJEPC, said the levy was unexpected as such rough stones are imported to be cut and polished and exported.
“There is very minuscule domestic consumption...we compete with China and Thailand in exports and the levy has the potential to disrupt exports of coloured gemstones from Rajasthan , the gemstones hub, which employs 4 lakh workers,” Agrawal said . GJEPC also said that given the relatively low value of imports the levy would hardly yield the government any revenue.
However, sources in the know said that in the absence of duty on such stones, certain unscrupulous entities within the trade engaged in suspected round tripping and overinvoicing of the roughs to avail of cheap export credit from banks. These cheap monies are allegedly deployed in higher yielding assets until the credit cycle is completed. Most of the exports and imports are undertaken with related parties. “Now that a duty has been levied, there will be more transparency in valuation of such st ..
However, GJEPC’s Agrawal said that instances of misuse in gemstones’ import hadn’t been brought to the Council’s notice. Imports of rough precious and semi precious stones totalled $571.32 million in FY19 while exports of polished precious and semi precious gemstones were $520.09 MN according to Directorate General of Commercial Intelligence and Statistics.
Source: economictimes.indiatimes.com