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Romancing the stone... Not!

Romancing the stone... Not!
Gems and jewellery have transformed Plain Janes into ravishing beauties over the centuries. Today, the jewellery market in India is one of the biggest in the world, but now the shine seems to have gone off the glittering baubles with the gems and jewellery industry angry at the government imposing compulsory PAN card application on Jewellery Sales over Rs 1 lakh.

The All India Gems and Jewellery Trade Federation(GJF), the national trade federation for the promotion and growth of trade in Gems and Jewellery (G&J) sector across India, has expressed dissatisfaction over imposition of requirement of PAN card on any transaction over Rs 1 lakh by stating that this is not practical and will discriminate 70 per cent of the rural buyers as they are not under tax net and do not have PAN cards, according to the GJF sources. “The high import duties have led to smuggling and this new measure shall in no way stop generation of black money. The delay in lowering duty on gold only hampers our economy as black money will be generated and parked in gold.

The government will be required to come up with more trade-friendly policies where industries can develop and grow to build the economy.”

The GJF, however, welcomed several new initiatives by the government in its budget proposals including gold monetisation scheme and also bringing jewellery sector under ‘Make in India’ programme of the government. The federation expressed thanks to the government for progressively stimulating several positive changes in policy such as abolition of 80:20 rules and opening of gold loans to the trade.

Haresh Soni, Chairman GJF, said, “The requirement of PAN card  will  discourage thousands of buyers from buying jewellery since many of them may not have PAN card – particularly people who are mostly engaged in farming and private business in rural India. We have TCS applicable on sales of bullion on Rs 2 lakh and on Rs 5 lakh of jewellery. The new proposal of adding a further requirement of PAN card on sales over Rs 1 lakh will be discriminating the 70 per cent of the rural buyers of jewellery as they are not under tax net and do not have PAN cards. This would not be fair and justifiable under law as it tantamount to discrimination.”

 Manish Jain, Chairman-elect, GJF, said, “We hope that union finance minister addresses the important issue of reduction of import duty on gold which has given rise to creation of parallel economy through smuggling of gold. The FY 2015 CAD/ GDP ratio is presently around 0.9 per cent and is estimated to reduce to 0.3 per cent in the next year. We expect import duty reductions on gold soon. The G&J industry does not generate black money, but is badly affected when government includes industry with all black money initiatives, while the real black money generation is left open.”

Bachhraj Bamalwa, Director, GJF, said, “The +Make in India+ programme can be very effective if government will take industry into confidence. The gold monetisation scheme is a very positive move and will help control the current account deficit and will allow gold depositors to earn interest and provide industry’s capital needs. The government needs to look at the positive side of things too, where an industry provides employment to crores of people and helps the economy of the country.”
Speaking on the PAN card issue, he said that the gems and jewellery sector is not the generator of black money. “More than 80 per cent of the value of jewellery is raw materials like gold and silver which are legitimately imported in the country.”

Ashok Minawala, Director, GJF, said, “We will be facing problems of encouraging buyers to visit our showrooms since the new restriction of PAN card compulsory for buying jewellery articles above Rs 1 lakh. It is a negative step for the industry as this would neutralise benefits arising out of monetisation scheme which is positive. As of last year, there are more than 14 crore pan cards issued in India. Will it be justifiable to ask for a pan card from approximately 89 per cent of the population who do not possess one?”

The GJF welcomed the progressive and pragmatic Union Budget presented by the finance minister and stated that it sees the Union Budget as an extension of several positive initiatives taken by the union government since taking charge. “It is the change in attitude of the government towards the gems and jewellery sector and the proactive government measures of introducing the gold monetising scheme and indigenous manufacturing of gold coins with symbol of Ashoka Chakra. Gold monetisation scheme should offer opportunity for inclusive growth of sector which includes banks, jewellers, refiners and traders. It is expected that the National Skilling Mission will take up the challenge of enhancing skills of over two crore people in the gems and jewellery sector as well as encourage youth entrepreneurs to enter the business.”

Ashok  Minawala, Director, GJF noted that there are about six lakh players in the gems and jewellery industry, which has been facing hard times over the past few years. “The problem is that the government is applying the same solutions – not new – to the problem. Where the Money Laundering Act is concerned, the G&J has been singled out in assisting terrorism. We welcome the pragmatic budget by the finance minister. Jewellery majorly bought by housewives for family financial security purposes. While 70 per cent of this industry exists in rural markets where the majority do not have PAN cards and 89 per cent of the population India do not have PAN cards, the government asking for PAN cards for sales over Rs 2 lakh and sales of bullion over Rs 5 lakh is not a practical solution and will discriminate against those not having pan cards.

Our industry is proudly associated with “Make In India”, but hike in gold import levies have made gold smuggling a lucrative business and any delay in lowering gold import duties will hamper our business. We expect the government to reduce import duties on gold and come up with more industry-friendly policies. G&J does not indulge in black money, and it is wrong and unjust to punish our industry. We must recognise the difference between black money – and blood money which is associated with crime, terrorism and other areas. What took the government 15 years to do, we can do it in one month (collect gold from the public).Our industry is in transition phase to professional organisations from small businesses. We should not curb people from spending.

The +SabkaSaath, SabkaVikas+ clarion call by Prime Minister Narendra Modi is not happening and the government will lose revenue and blame us for this. We need ease of business. We have seen pro-active measures by the BJP government since it came to power and included removal of 80:20.We now urge for removal of this imposition of compulsory PAN card application  (on jewellery sales) as we believe that an old industry like ours should not be strangled.” Replying to queries, he said, “The government needs to address where this black money is happening and generated. It is
difficult for industry to generate black money. Last year, we stopped selling gold coins and sought areas and ways to generate jobs and revenue. Gold bars are not available anywhere in the market. Our government is a reasonable one and there could be areas and effects that the government has not understood.  There is every likely chance that the finance minister will withdraw the Bill. We have written to the government seeking a personal hearing on this subject.”

Pointing out that the gems and jewellery industry highlights a size amounting to Rs 2,50,000 crores (including Rs 1,70,000 crore in the rural areas), he said, “This bill is creating a hurdle on people’s spending and when it is removed, money will come back into rotation and the economy will improve. We have asked for the PAN card requirement to be for over Rs 10 lakhs with duties at 10 per cent for imported gold and jewellery. Smuggling gold is doing lucrative business for the illegal industry and the government is “killing the jeweler”who wants to do legitimate business. Majority of jewellery sales is above 35 gms and falls automatically in the Rs 1 lakh bracket where many buyers may not choose to give their PAN card. We have urged government for gold monetisation where the government works with the jewelleryindustry. We are targeting one per cent of the 20 per cent gold lying with the people. The Rs 1 lakh PAN card issue is a direct hit on our stomach.

There is no solution for this and it has to go. The G&J industry must be exempted from this. Or else the organised G&J industry sector will suffer and the “unaccountable” (illegal) sector will thrive instead. We (Indians) have a history of fascination for gold and cannot remove it.”

Did you know?

The All India Gems and Jewellery Trade Federation (GJF) represents over 6,00,000 players comprising manufacturers, wholesalers, retailers, distributors, laboratories, gemologists, designers and allied services to the domestic gems and jewellery industry, which is a hand-crafted and labour intensive sector, with over one crore strong labour force engaged in the manufacturing of jewellery industry in the domestic sector
Dominick Rodrigues

Dominick Rodrigues

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