The Union Budget 2010-11 has failed to please the Indian gems and jewellery sector, which was expecting the government to provide tax relief. In fact, contrary to the expectations of small-scale units, the Union finance minister (FM), Pranab Mukherjee has decided to hike the customs duty on gold and silver, thereby disappointing the gems and jewellery units.
Discontent with Budget
SME jewellery units were expecting this Union Budget to serve as a perfect medium to address various issues and fulfil the requirements of the industry in order to help them recover from the adverse impact of the global economic downturn. However, the Budget has failed to evoke a positive response from the SME-dominated sector.
Although exports have entered the green zone, recording steady growth since the past few months, we were expecting the government to announce some key measures in the Union Budget 2010-11 in order to sustain the upward trend. However, this did not happen. The FM could have undertaken more initiatives to help SMEs in the gems and jewellery sector emerge from the recessionary pressures, said Vijay Soni, proprietor of Mahabir Jewellers, a mid-sized wholesaler of gold, kundan jadau and diamond jewellery in Kolkata.
Besides, Indias gems and jewellery sector is up in arms over its exclusion from select export sectors, which can avail the 2% interest subvention scheme for one more year till March 31, 2011.
With gems and jewellery sector not being extended the benefits of concessional export finance scheme, SMEs in the industry would be hurt the most as cost of manufacturing would surge, thereby leading to erosion of their competitiveness and in turn affect exports, said B Bhattar, director of Bhattar & Sons, a small-sized jewellery store in Kolhapur, Maharashtra.
Moreover, SME jewellery units and industry representatives further fear that the domestic gold and silver jewellery sales may plunge in the coming months due to the increase in excise duty, which in turn may lead to job losses in the sector.