One of the most pressing needs is to amend the Customs Act and simplify customs procedures, writes Kirit Bhansali, Chairman, GJEPC
India’s gem and jewellery industry has long been a strong pillar of the national economy, supporting over 4.3 million livelihoods and contributing significantly to foreign exchange earnings. In FY 2024–25, exports stood at USD 28.7 billion, reflecting the resilience of our entrepreneurs and artisans. However, the sector is currently navigating an exceptionally difficult phase, shaped by global geopolitical concerns, slowing demand in key markets, and the impact of U.S. tariff actions.
The Government of India merits recognition for proactively signing multiple Free Trade Agreements (FTAs) that expand opportunities for Indian exporters. At the same time, evolving global trade conditions and domestic operating challenges call for timely policy refinements and procedural improvements. In this context, GJEPC has submitted its pre-Budget recommendations to the Hon’ble Finance Minister, suggesting targeted measures to strengthen competitiveness, improve ease of doing business, and support industry resilience.
One of the most pressing needs is to amend the Customs Act and simplify customs procedures. While FTAs reduce tariffs, efficient and predictable customs processes are equally important for a high-value, time-sensitive sector like gems and jewellery, where even minor delays add significant costs. A modernised Customs Act, supported by risk-based clearances, digital appraisals, and uniform procedures across ports, will ensure faster movement of goods, improve operational efficiency, and help exporters fully leverage both existing and upcoming FTAs.
India’s dominance in diamond cutting and polishing must now evolve into leadership in diamond trading as well. While we process nearly 90 per cent of the world’s rough diamonds, trading and price discovery continue to take place outside India, in centres such as Antwerp and Dubai. To bridge this gap, we have proposed a liberalised, transparent and predictable taxation framework for foreign mining companies operating in Special Notified Zones.
The current Safe Harbour mechanism does not encourage active trading and limits international participation. Drawing from Belgium’s successful “Carat Tax” model, we have suggested a more suitable tax structure that promotes genuine trading activity rather than discouraging it. Allowing reputed global brokers to operate in India will further improve liquidity, transparency and confidence, helping India emerge as a true global hub for diamond trading and value discovery.
Cost competitiveness remains a growing concern for Indian manufacturers. Rising competition from Africa and Southeast Asia, combined with beneficiation policies of mining countries, is putting pressure on our industry. Semi-processed diamonds are often classified as fully cut and polished, attracting a 5 per cent import duty. Rationalising this duty to 2.5 per cent and removing duties on rough gemstones will help protect manufacturing activity, preserve skilled jobs, and ensure India remains globally competitive.
Volatility in precious metal prices has added further strain on exporters. With gold prices at historic highs, the existing fixed-rate duty drawback system is no longer practical, as it reimburses only a part of the actual duty paid. Moving to an ad-valorem, value-based drawback mechanism will provide fair compensation, improve predictability, and help exporters manage costs in an uncertain price environment.
Export diversification is essential for long-term stability. Platinum jewellery exports have grown sharply in recent years, but this growth is largely limited to SEZs. Domestic Tariff Area units do not receive similar benefits, putting them at a disadvantage. Extending duty drawback benefits to platinum and gold articles in the DTA will create a level playing field and unlock new growth opportunities in high-value jewellery segments.
India also has a strong opportunity to emerge as a global jewellery shopping destination. Our craftsmanship, heritage and design are unmatched, yet foreign tourists currently face a higher tax burden when purchasing jewellery in India. A comprehensive tax refund scheme covering GST, BCD and AIDC, similar to global shopping hubs like Dubai and Singapore, will make Indian jewellery more attractive and significantly boost tourism-led retail.
Operational flexibility is crucial to protect jobs during periods of weak global demand. Allowing SEZ units limited flexibility to undertake domestic job work during export slowdowns, and enabling clearance of unsold stock into the domestic market on payment of duty, will prevent idle capacity and safeguard skilled employment across the sector.
Finally, sustaining India’s leadership in lab-grown diamonds requires continued policy support. The industry still depends on imported seeds for quality and consistency. Extending the duty exemption on LGD seeds beyond March 2026 will help maintain cost competitiveness, support exports, and strengthen India’s position in this fast-growing global segment.
These recommendations are aimed at helping the industry move forward with clarity and confidence at a time of global uncertainty. With margins under pressure and competition intensifying, timely and practical reforms can provide stability and improve ease of doing business. More importantly, they will enable India’s gem and jewellery sector to build on its strengths, adapt to changing global realities, and progress towards a stronger, more influential position in the international market.
Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the publication.
