India: GJEPC Enlists State in Bid to Lift Morale

Since the publication of allegations that Nirav Modi and his uncle Mehul Choksi, managing director of Gitanjali Gems, were involved in defrauding Punjab National Bank of $2 billion, keeping morale high has become a priority for the Gem & Jewellery Export Promotion Council (GJEPC). Together with industry experts — both national and international — the council has committed itself to boosting the industry through various shows, initiatives and government negotiations. “We expect gem and jewelry exports to grow by $60 billion by 2022 and employment [in the industry] to increase to 8 million from the current 5 million,” said chairman Pramod Agarwal. Major initiatives and activities Talks with the government will revolve around policy reforms and infrastructure support for each sector within the industry. Agarwal explained that the GJEPC would advance the following proposals: For the diamond sector:

• Introduction of a realistic presumptive-tax rate — calculated based on average income rather than actual income — for the polished-diamond industry, to encourage foreign companies to move capital to India.
• Zero taxation for foreign mining companies operating at the India Diamond Trading Centre (IDTC) in Mumbai, the nation’s only Special Notified Zone (SNZ).
• Introduction of a “job work” policy for the diamond and colored-stone sector. This would allow international companies to send rough gems for cutting and polishing in India, as long as they are reexported immediately.
• Sourcing of rough diamonds: Implementing an industry-friendly government policy to restart diamond and colored-gemstone mining in India, especially for the abandoned Bunder project in Madhya Pradesh.

For the gold sector:

• Implementation of a comprehensive gold policy to make imports of precious metals more cost-effective.
• To create a government-accredited regulatory body comparable to the London Bullion Market Association.
• Opening jewelry parks in multiple cities and towns to encourage local artisan jewelry. This would allow workers and factories in local jewelry markets to move to central locations, thus developing the trade.
• Setting up Common Facility Centres (CFCs)—a government initiative to provide resources for micro and small enterprises — at all major gem and jewelry hubs in India.
• Inclusion of precious-metal jewelry (gold and silver) in the list of items covered by the free-trade agreement (FTA) or the Chinese Closer Economic Partnership Arrangement (CEPA), which would apply to trade with any country that has levies on par with the jewelry import duty in India.

Skill development To counter competition from China, the council has been organizing a host of seminars and workshops on different topics — from cutting and polishing to understanding taxation. “In terms of skill management and development, the council has set up gem and jewelry institutes across India,” Agarwal shared. “Apart from the Indian Institute of Gems and Jewellery (IIGJ) in Mumbai, Delhi and Jaipur, the council has recently inaugurated IIGJ Varanasi and has plans to set one up in Udupi, Karnataka, very soon.” Agarwal further mentioned setting up CFCs in identified gem and jewelry clusters across India. “We have received grants to set up 13 CFCs [from] the government. CFCs in India would improve quality production of small and medium players and karigars [artisans], who are the backbone of the industry,” he elaborated.