JAIPUR: Pink City Jaipur has started bedecking itself for Diwali but the gem and jewellery industry, which sparkled at this time, is struggling.
This is also the wedding season but a serious recession on the back of a hike in taxes via GST and spike in import duty on gold has made for 25% dip in business and lay-off of 20% of total workforce.
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Justin Verky, owner of Jewel Ace, who deals in traditional Rajasthani Thewa designer jewellery in Silver and Gold says, “Business is down 40% and even affordable middle-class jewellery has no takers. We had to let go of 25% of our staff. We had no money to pay them.”
Jaipur has been world’s gem mart with its diamond and semi-precious stones and gold boasting a 5% market share of India’s Rs 5 lakh crore annual trade.
Jaipur Gems and Jewellers Association’s President Sanjay Kala said, “The economic slowdown has made for cautious buyers. Jewellery bought on special occasions, or as investment, is out. Demonetisation hit hard, taking away bit buys by women from their own savings. Then GST hit us.”
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He said a 3% GST hike against 1% tax of earlier hit hard. Investment sales went down. With government making cheque payments mandatory for over Rs 2 lakh worth of purchases, free sale was hampered.”
Jewellers say, post GST, an increase of 12.5% in duty on some 900 ton of Indian gold import encouraged smugglers to boost illegal trade and evade Rs 5 lakh in tax on import of each kg.
This situation should be arrested. While the Centre decreased GST on semi-precious stones from 3 to 2.5%, exempted import duty on silver and platinum and reduced rates on diamond works from 5% to 1%, demand has failed to pick up, leaving the industry reeling.
Nawal Agarwal, owner of Birdhi Chand Ghanshyam Das jewellery showroom, specialises in Gold and Kundan Meena jewellery.
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He said, “As far as Gem and Jewellery trade is concerned, GST is a good step. However, the 12% duty on raw gold is too high. It should be 3%. That would arrest illegal trade of which just 10% is detected.
Traders who buy smuggled gold would always be in advantage, saving Rs 5 lakh per kg. Even import duty should be brought down to 6-7 % which will end this kind of smuggling,” he said.
Kushal Dhaddha, owner of Spectrum Jewellers, said “Many exporters have shifted their offices to other countries. We should have ease of business like in America, China and Bangkok, where they get cheap business loans, cheaper gold and cheap labour as well.”