Gems & jewellery industry6

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SWOT Analysis
Market Overview- Domestic
Market Overview- Export
Market Overview- Luxury
Value Chain Analysis
Demographic clusters in India
Factors Impacting G&J industry
Porter’s Five forces in jewellery industry
Key demand drivers
Government regulations and support
Budget 2012-13 Impact
Key Players
Future Outlook
Recent News and its implications

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Ministry

of Industry and Commerce policy
Tax and duties
FDI policies
Foreign trade policy
Key budget proposals 2012-13 & its implications

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All industrial undertakings of G&J are
exempted from obtaining an industrial license
to manufacture
Small scale units are exempt from the
locational restrictions
Entrepreneurs are required to obtain statutory
clearances relating to pollution control and
environment for setting up an industrial project


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Cutting and polishing of gems and Jewellery treated as

manufacturing to be treated for the purpose of exemption
under Section 10A of the Income Tax Act
Service Tax on services (related to exports), which are
rendered abroad have been exempted

Duty free import of tools, machinery & equipment, rough
semi-precious stones, polished diamond
The import duty on polished diamonds was abolished

A new scheme by which units in SEZ will be able to obtain
tax free receipt of services wholly consumed within the zone

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100 % Foreign direct investment (FDI)
allowed in G&J through the automatic route
The Indian retail FDI policy permits 51%
ownership of single brand retail stores
This provides multi-national jewellery
brands such as Tiffany, Cartier and Zales
among others the opportunity to set up
operations directly in India
The Government, however, continues to
restrict foreign investment in multi-brand
retail
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To neutralize duty incidence on gold jewellery
exports, Duty drawback is allowed on such exports
Designated diamond dollar account for businesses
with a track record of export/import
To promote exports, value limit of personal carriage
has been increased from USD 5mn for overseas
exhibitions . Also limit for personal carriage as
samples for exports promotion is now USD 1mn
No of days for re-import of unsold items for
exhibition participation in USA is now 90 days
Promotion of export of 'hallmark' jewellery from
India to assure foreign customers of quality and
purity of jewellery made in India

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Positive proposals/ impact
Basic Custom Duty on pre-forms of precious and semiprecious stones (other than diamonds) reduced from 10 to
2%.
Concessional rate of tax of 15% on dividend received from
its foreign subsidiary proposed to continue for one more
year. Corresponding amendment to remove cascading effect
on subsequent dividend distributed by Indian Company.
Modified provisions of GAAR will come into effect from
01.04.2016
Excise duty of 1% on branded precious metal jewellery to be
extended to include unbranded jewellery
Full exemption from excise duty on branded silver jewellery

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Levy of 4% excise duty on silver manufactured from smelting zinc or lead.Surcharge of
10% on persons (other than companies) whose taxable income exceeds Rs. 10 million.

Surcharge on Income Tax has been increased from 5% to 10% on domestic companies
whose taxable income exceeds Rs. 100 million to be in force for only one year.
Foreign companies who pay a higher rate of corporate tax, surcharge on Income Tax has
been increased from 2% to 5%, if the taxable income exceeds Rs 100 million to be in force
for only one year.
In all other cases, such as dividend distribution tax or tax on distributed income, current
surcharge increased from 5 to 10%.
A final withholding tax at the rate of 20% on profits distributed by unlisted companies to
shareholders through buyback of shares. No capital gains in hands of shareholders.
Tax on payments by way of royalty and Fees for Technical Services to non-residents
from 10% to 25% (subject to beneficial rates in DTAA). DTC VAS, software imports and
other such services utilized by the Indian Gem and Jewellery Industry, categorized
under payments in the nature of royalty and FTS, would be impacted.
Introduction of Commodity Transaction Tax (CTT) on sale of non-agricultural
commodities (which would include gold and other precious metals) at 0.01%.

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Increased basic customs duty from 2% to 4% on
standard gold bars, gold coins of purity
exceeding 99.5% and platinum.
Increased basic customs duty from 5% to 10%
on non-standard gold.
Increased basic customs duty from 1% to 2% on
gold ores and concentrates for use in the
manufacture of gold for refining.
Increased excise duty from 1.5% to 3% on
refined gold.
Imposition of basic customs duty of 2% on cut
and polished colored gem stones.

Gems & jewellery industry6

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