Govt to earn Rs 1000 cr from rough diamond duty

Govt to earn Rs 1000 cr from rough diamond duty
ENS ECONOMIC BUREAU

MUMBAI, MAR 3: The Mumbai customs is expected to earn a revenue of Rs 1,000 crore in the next fiscal through the levy of five per cent duty on imports of rough diamonds as announced by Finance Minister Yashwant Sinha in the Union Budget for 2001-02. Predictably, diamond exporters are up in arms against the government move.

"On an annual basis, rough diamonds worth about Rs 20,000 crore are imported here and if the same inflow sustains, the department will get a revenue of Rs 1,000 crore with the imposition of this duty," D K Acharyya, Chief Commissioner of Customs, Mumbai, told newspersons here today.

In the budget, the Finance Minister had announced a duty of five per cent on rough diamonds, raw pearls, raw cultured pearls, rubies, emeralds and sapphires, while for gems and jewellery industry, the duty was reduced for cut and polished stones to 15 per cent from 35 per cent.

The industry however, is perturbed, albeit temporarily, by the finance minister's announcement of 5 per cent import duty on rough diamonds which are allowed to imported duty free, but only on their commitment to meet their export obligations mentioned under the various import licences under which they are allowed to import roughs duty free. This however, restricted their imports of roughs.

However, the 5 per cent import duty levied on the import of roughs clears the need for licences and export obligations. The government has now created another channel for imports of roughs and met the World Trade Organisation (WTO) requirement in the entire gems and jewellery industry.

Following the budget proposals, the Customs authorities, however, have refused to clear the rough diamond consignment without the payment of the controversial 5 pre cent import duty. Industry sources say, in a crucial month of March, holding up consignments worth around Rs 500 crore is detrimental to the overall industry.

The new import duty on import of roughs is not for the exporting community but for anyone else not connected with the diamond industry and still wants to import roughs. ``We are negotiating with the commerce and the finance ministry to clarify on the issue,'' said Sanjay A Kothari, chairman, Gemand Jewellery Export Promotion Council (GJEPC).

A notification clarifying the situation is expected to be made available next week from the government, top industry sources say.

Gold prices fall after budget
MUMBAI:Gold seems to have lost its lustre after the budget. The yellow metal remained the centre of activity on the bullion market during the bygone week under review as it rallied in the initial part of the week, but nosedived on Wednesday following a steep cut in import duty in gold and finally closed with notable losses over the previous week.

Standard gold started firm at Rs 4400 and shot up further to Rs 4450 due to firm overseas advices. Thereafter, as soon as the Finance Minister, Yashwant Sinha, in his budget proposal on Wednesday, announced a steep cut in import duty on gold from Rs 400 per ten gram to Rs 250 per ten gram, stockists and banks started heavy offering and prices crashed by Rs 120 in a single day to touch Rs 4330. Thereafter, prices continued to fall and closed at a recent low of Rs 4250, showing a fall of Rs 90 over the previous week's close of Rs 4340.

Ten-tola gold bar (.999 purity) also started firm at Rs 51,600 and after rising to a high of Rs 52,200, plummeted to fall below the Rs 50,000 mark and closed at Rs 49,700, showing A whopping Rs 1100 loss over the previous week's close of Rs 5,800. 22-carat gold declined by Rs 85 to Rs 3930 from the last close of Rs 4015.