The Indian Union Budget for 2025 is set to be presented by Finance Minister Nirmala Sitharaman on February 1, 2025, at 11 AM. As the nation gears up for this crucial fiscal event, various sectors are voicing their expectations and demands to stimulate economic growth and support industries recovering from the pandemic’s impact. One of the sectors making strong requests is the gems and jewelry industry, which is seeking a significant reduction in Goods and Services Tax (GST) rates.
Current Situation of the Gems and Jewelry Industry
The gems and jewelry sector has traditionally been a vital component of India’s economy, contributing significantly to exports, job creation, and cultural heritage. However, the imposition of GST has posed challenges, particularly affecting pricing structures and consumer demand.
GST Impact Analysis
| Year | GST Rate (%) | Industry Revenue (in INR Cr) | Consumer Spending (in INR Cr) |
|---|---|---|---|
| 2017 | 3 | 30000 | 50000 |
| 2020 | 3 | 25000 | 45000 |
| 2023 | 3 | 28000 | 48000 |
The above table illustrates the revenue figures in the gems and jewelry industry, showing a fluctuation in industry revenue and consumer spending since the GST was implemented. The high tax rates have been cited as a reason for declining consumer interest, especially during economic downturns.
Industry’s Demand for GST Reduction
The Gem and Jewelry Council (GJC) has been at the forefront, actively lobbying for a reduction in the GST rate from 3% to 1%. This proposal aims to enhance affordability for consumers, stimulate demand, and ultimately lead to higher sales volumes. The GJC argues that such a reduction will not only rejuvenate the industry but will also help in the fight against the unorganised sector’s dominance in gold trading.
Potential Benefits of GST Reduction
- Increased Consumer Demand: Lower prices can attract more customers, thereby boosting sales.
- Enhanced Compliance: Competitive pricing can motivate more businesses to operate within the formal economy and comply with tax regulations.
- Job Creation: A revitalised industry can create additional employment opportunities across the supply chain.
Conclusion
As the budget presentation date approaches, the gems and jewelry industry is hopeful for a favorable response to its GST reduction demand. With the potential to stimulate growth, enhance consumer spending, and increase compliance, such a move could have far-reaching benefits for the economy as a whole. Stakeholders from this sector are eagerly awaiting the government’s decisions, hoping for policies that will foster a conducive environment for business recovery and sustainability in 2025 and beyond.
