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Gold jewellery: Indonesian imports dulling local business |
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AHMEDABAD: Local jewellery industry players are facing stiff competition from Indonesian rivals. According to the Free Trade Agreement (FTA) between India and Indonesia, duty on gold jewellery imports from Indonesia is 1%, whereas if imported from other countries, the duty is 10%. Industry insiders say that every week, 1 tonne of jewellery is imported to India from Indonesia, which is leaving local players non-competitive."Raw gold attracts 10% duty, and with cess and VAT, levies come to 12%," said Manish Jain, chairman of the All India Gems and Jewellery Trade Federation. "If you add minimum 4% making charges, then jewellery made from that gold becomes very expensive compared to the ones imported from Indonesia."
Insiders said that importers also profit by melting jewellery imported from Indonesia and selling it as raw gold. "Even if the jeweller melts jewellery imported from Indonesia and makes a new product, he gets around 8% profit compared to jewellery made of raw gold imported from other countries," said Jayesh Vithalani of Vivro Financial Service Pvt Ltd.
Over 80% of gold imported to India is from Switzerland; gold is also imported from UAE, South Africa, and Australia. But in recent times, there has been a surge in imports from Indonesia. Jain said that with imports of jewellery rising from Indonesia, many workers are facing hardships as the demand for making jewellery is falling. According to rough estimates, over 1 crore workforce is engaged in the manufacturing of jewellery in the domestic sector.
"In the long term, cheap imports can jeopardize the sector," said Jain. "Instead of gold, the government can put other commodities under FTA. Gold is a high-value commodity and by allowing cheap imports, the government too is losing revenue."
Another issue which has raised serious concerns in the jewellery sector is of the likely imposition of the requirement of PAN card for any transaction over Rs 1 lakh. The announcement was made by Union finance minister Arun Jaitley in the budget speech earlier this year. This was to come into effect from June 1, but the decision is yet to be implemented. "The finance ministry has put the decision on hold after we asked for clarity on this rule. It is likely to come into effect soon," said Jain. Nitin Khandelwal, zonal chairman, western region, GJF said, "If implemented, the biggest impact would be on the organized players in the sector."
Source : timesofindia.indiatimes.com
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