Will gold maintain its luster in Budget 2024-25? What may jewellery sector expect?

Gold is something that never outshines and is among one of the favourite metals among people to invest in. As per the recent outcomes of the equity markets, gold prices on the Multi Commodity Exchange surged 14%, outpacing the benchmark Nifty50 index.  

Not only Aam Aadmi but also the gem and jewellery sector is eagerly anticipating several measures to bolster its growth and address industry-specific challenges in the upcoming Union Budget that will be presented by Finance Minister Nirmala Sitharaman on July 23, which is particularly coinciding with the wedding and festive season, when the demand of gold and gems traditionally goes high on demand.

What does the jewellery sector expect?

India’s jewellery sector is highly dependent on the import of raw materials such as gold, diamond, silver and coloured gemstones and plays an important role in the overall economic growth. However, some developments are expected:

Import Duty Reduction: There is hope for a reduction in import duties on raw materials such as gold, silver, and diamonds. Lower duties could help reduce manufacturing costs and make Indian exports more competitive globally. According to the sources, the council has proposed reducing the import duty on Gold Bars from 15% to 4%, which is likely to unlock the duty blockage and provide the industry with increased working capital.

Diamond Imprest Licence: This refers to simplifying the process for obtaining licenses to import diamonds. Streamlining this process could reduce bureaucratic hurdles and enhance operational efficiency for businesses involved in the diamond trade. It is important to note that certain mining countries do not export diamonds in raw condition, it is mandatory to undergo some value addition, such as cutting and finishing before these are transported to India. 

Boost to Gemstone Mining: Expectations for policies that support and promote gemstone mining within India. This could include incentives for exploration, mining, and processing facilities aimed at increasing domestic production.

Digital Infrastructure: Improvements in digital infrastructure and technology adoption across the industry. This could include initiatives to facilitate online transactions, digital certifications, and virtual trade shows to promote business continuity and resilience.

These expectations reflect the industry's desire for supportive policies that can stimulate growth, enhance competitiveness, and address operational challenges in the gem and jewellery sector.