Millennium Post

Building the bling

India is at the cusp of shortage of skilled staff in the ‘gems and jewellery’ industry, despite people from all walks of life pitching in to make their money in various ways and means, right from top business honchos to tiny home-based artisans. This industry is complaining about ‘struggling to maintain’ its business in the face of what it views as various obstacles like central excise duty, PAN card sales, inspector raids.

“The strike from March 1, 2016 ‘paralysed’ the whole industry and saw ‘our backs being broken’. The excise levied by the Finance Ministry in 2005 and 2012 was rolled back, but on February 29, 2016 showed that it had done its homework without studying industry realities. Though now ‘Search, Seize and Arrest’ (where one family was subjected to body checks) has been put aside till the HLC Committee takes a call. Ours is a very unorganised industry and you cannot levy excise as the manufacturers themselves are the labourers,” Ashok Minwala Director, AIGJF told Millennium Post, adding that the government said that there’s black money parked in gold, which is impractical for them and the government should not put restraints on them as over one crore people are employed in this industry, having a larger share in the country’s GDP.

However, recently, the gems and jewellery industry officials appeared to be buoyant and cheerful with good news emanating from the central government for them. July 16 witnessed Ashok Minwala Director, AIGJF, highlighting the Federation’s plans for holding seminars about guiding jewellers on new excise duty norms – following the Union Finance Ministry announcing SSE eligibility limit from Rs 12 crore to Rs 15 crore, and SSE exemption limit from Rs 6 crore to Rs 10 crore per financial year; excise duty on jewellery payable on first sale invoice value; goods in transit not excisable; and exchange of old gold ornaments into new ornaments excise duty being charged only on value addition. “The BJP government is proactive and has not left any stone unturned in providing favourable solutions. But we request our government to continue their support to our industry by also raising the PAN card limit, and are hopeful it will soon issue TRU notifications and circulars on all points considered and accepted,” he said. 

Meanwhile, “diamonds are forever”, as the saying goes. But making them forever is another task and it was in this context that IIGJ (The Indian Institute of Gems & Jewellery ) and GJEPC (Gem and Jewellery Export Promotion Council) announced recently a tie-up with L N Welingkar Institute of Management Development and Research (WeSchool), Mumbai and the most comprehensive courses (graduate, PG and certificate) in jewellery design and manufacturing techniques in year 2016-2017 for emerging jewellery professionals and entrepreneurs.

“We are on the cusp of shortage of skilled staff because of the rapid growth of the gems and jewellery industry due to domestic and international demands,” Vasant Mehta, Chairman, IIGJ Mumbai, said while describing this course as the first-of-its-kind that came at a much-needed time to groom existing and new talent. “Post 1992, the gems and jewellery industry started manufacturing in a big way jewellery that was well accepted in American markets but with proper study of this product being needed, the IIGJ was started and today it has 100 per cent students who are well-placed including entrepreneurs. Some girls even did the courses as a hobby, and took it up as a career later. “I have seen people who started from home and today own showrooms. We also have gold appraisal training for banks like HDFC, Axis etc, besides our two to three students participating in World Skills Competition”, he added.

Prof Dr VH Iyer, Welingkar Institute of Management, said these courses would help contribute to the Make in India initiative as skilled and trained workforce was always needed in the gems and jewellery industry. 

“We are planning training courses that are unparalleled globally and attract top industry professionals, but Italy, Hong Kong, China and Thailand are dominating the fine jewellery market and we need to penetrate this through such courses,” said Praveenshankar Pandya, Chairman, Gem and Jewellery Export Promotion Council (GJEPC). 

“The Government is keen on Make In India and this industry is poised to become the main growth engine for this. However, the ideal cut-size diamond work is being done in China and elsewhere including 150,000 workers outside India.  “Surat labour force is fine-cutting 20 diamonds per day, while Chinese are similarly cutting 60 diamonds per day. We also feel that the National Skills Development Corporation (NSDC) throws open a huge opportunity for skilling this industry in new skills”, he added. 

However, many problems still continue to beset the Indian gems and jewellery industry. “Since 1992, jewellery exports were zero due to Gold Control Act but when this act got abolished and SEEPZ was established, we (industry) grew to become the fourth largest jewellery exporter globally. However, economic slowdown globally has affected us where our designing is done worldwide (due to our lack of such people) and we only supply models for this purpose. 

“Consumers, especially younger generation, are becoming smarter due to the Internet, and trained people are needed to cater to them. Also, we need to bring our domestic manufacturing industry to international standards level as the diamond cutting industry has witnessed loss of jobs after 2008 (10 per cent to 155 fall in such jobs where diamond cutters searched for alternative jobs). China, Israel and Belgium are ahead of us due to their infrastructure and experience in ‘ideal’ cuts," he said.

The effects of the Excise Duty on the gems and jewellery sector can be gauged from the following Q&A session with their officials just before their strike was called off. 

Why is there a big fear of excise in the minds of jewellers?
Jewellers have experienced the “draconian” gold control law of the excise department from 1960s to 1990s and the scars of those times are still being seen by many jewellers and goldsmiths. Beyond the complex excise compliances, there was the terrifying fear of the ‘inspector raj’ where the inspector made any small jeweler, artisan and goldsmith as their Any Time Money (ATM) as they walked into shops and workshops and tried to find flaws and showed their powers to collect haftas. 

After Gold Control Act, what was the difference to the gems and jewellery industry?
The jewellery business flourished only after the Gold Control Act was abolished. The trade started to become an industry which now generates self-employment for one crore individuals skilled as artisans and goldsmiths. Gems and jewellery is today the only sector that has given the largest employment in the unorganised sector. Today there are 4.5 million skilled workers, which include 1.8 million women employees. No other industry in the unorganised sector has driven such a huge employment. 

Why do jewellers feel that this excise duty is not practical for the jewellery industry?
The industry is a set up of manufacturers, wholesalers, retailers, artisans and goldsmiths, where the majority people are self-employed and are entrepreneurs. The exemption of six crores for this excise duty means any individual, workshop or company producing jewellery above 65 grams per day comes in the net. Therefore almost 90 per cent industry will be affected by this excise duty; a karigar who is doing work by casting, polishing, enameling, dye-work etc while earning Rs 500 per day will come under the net of excise because of the high price of raw material (gold/gemstone) as a single piece of jewellery will pass between 10-20 karigars. It is almost impossible to maintain compliance as per excise act and this is a very big challenge

What are the effects of Excise Duty on gems and jewellery?
It is impractical for the jewellers and artisans to comply with the excise norms and it will usher in the ‘inspector raj’. This will only enable organised manufacturing sector which is equipped with the compliances. This is a handicraft sector wherein over 100 million artisans, jewelers and karigars along with their families are dependent on this industry. The life of these people will be affected by excise duty imposition and there will be huge amount of unemployment. It will discourage skill in the industry and entrepreneurship by benefitting the Mudra banks initiatives taken by the government. Excise duty will lead to unemployment and that will act against the initiatives made by the government to develop Skill, Mudra Bank etc.”

What is the loss to jewelers because of excise? 
The industry is not tax shy as they pay huge duty of around Rs 30,000 crore every year. The industry is not worried about the one per cent extra tax, but rather about complying with the excise which is not practical and can lead to terrifying ‘inspector raj’.

Is black money parked in the form of jewellery?
It is not sensible for any intelligent person to park black money in jewellery as it has a value addition from eight per cent to 22 per cent over the cost of raw material.
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