India needs to strike free trade agreements with countries that produce raw materials imported by the gem and jewellery industry, according to industry association Assocham.
It said that the direct engagement with the mining source would spare the industry from paying steep prices.
About 90 per cent of raw materials are imported, and rough diamonds alone account for over 50 per cent of the imports.
In its study, Assocham has highlighted the necessity to secure raw materials at fair and competitive prices.
“As raw materials are not being sourced directly from the mining country, the prices paid by the Indian industry are high. The Indian gems and jewellery industry largely depend on imports of raw materials because the indigenous gems mineral production is far short of the actual requirements,” Assocham secretary-general D.S. Rawat said.
Besides, the industry remains susceptible to the impact of fluctuating demand and the variations in commodity prices and exchange rates.
Industry representatives, however, sought free trade pacts with major consumers of finished gems and jewellery products such as Russia, the EU and the US.
“What is required is the easing of tax and other compliances within the country. The income tax regime is so cumbersome that mining companies cannot sell in India. The necessary thing is to introduce presumptive tax. In any event, we already have zero duty on rough gem stones and diamonds while imports of gold are being discouraged,” said Pankaj Parekh, vice-chairman of the Gem & Jewellery Export Promotion Council.
Raw materials are often routed through Dubai, Israel and Belgium.
Source:- telegraphindia.com
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