How Budget 2025 Impacts the Diamond and Jewellery Industry
The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, introduces several measures poised to influence India's diamond and jewellery sector. These initiatives aim to stimulate domestic demand, enhance global competitiveness, and support industry growth.
Reduction in Customs Duties
A significant highlight is the reduction of customs duty on jewellery articles and parts from 25% to 20%, effective February 2, 2025. This move is anticipated to make jewellery more affordable, boosting domestic consumption, especially in the luxury segment. Colin Shah, Managing Director of Kama Jewelry, remarked, "The reduction of jewellery duty from 25% to 20% is a welcome move. For a country like India, known for its high jewellery consumption, this will definitely boost demand in the domestic market, especially in luxury."
Additionally, the duty on platinum findings has been slashed from 25% to 5%, making imports more cost-effective and enhancing profitability for manufacturers and retailers. This reduction is expected to diversify consumer choices and stimulate demand for platinum jewellery.
Support for Lab-Grown Diamonds
The budget also addresses the rapid growth in the lab-grown diamond (LGD) sector by removing the Import of Goods at Concessional Rate (IGCR) conditions for duty-free imports of LGD seeds. This policy change is expected to lower production costs, making LGDs more accessible to consumers and boosting their demand. The Gems and Jewellery Export Promotion Council (GJEPC) has lauded this move, noting that it aligns with industry representations to the government.
Benefits for MSMEs
Micro, Small, and Medium Enterprises (MSMEs) constitute a substantial portion of the jewellery industry. The budget raises the turnover limit for MSMEs from ₹250 crore to ₹500 crore, granting more enterprises access to government schemes and credit facilities. This change is expected to enhance operational efficiency, facilitate technological upgrades, and improve access to capital for small and mid-sized jewellery manufacturers.
Income Tax Relief and Consumer Spending
The new tax regime offers income tax relief for individuals earning up to ₹12 lakh, which is expected to boost household consumption, savings, and investment. This increase in disposable income could lead to higher spending on discretionary items, including jewellery, thereby positively impacting the industry.
Industry Reactions and Future Outlook
The jewellery sector has responded positively to these budgetary measures. Following the announcements, jewellery stocks experienced an uptick, reflecting investor confidence in the sector's growth prospects. Companies like Senco Gold, Kalyan Jewellers, and Titan Company saw notable gains in their stock prices.
While the budget addresses several industry concerns, stakeholders had also hoped for a reduction in gold import duty and the establishment of a dedicated regulator for digital gold to enhance transparency and investor trust. These areas remain on the industry's agenda for future policy considerations.
In summary, Budget 2025 introduces measures that are likely to invigorate the diamond and jewellery industry by reducing costs, enhancing competitiveness, and increasing consumer spending power. These initiatives position the sector for robust growth in the coming years.