As India prepares for the Union Budget 2026-2027, the country's gems and jewellery industry is actively lobbying the government for a comprehensive package of fiscal and policy reforms. Industry bodies are advocating for GST reductions, customs procedure modernization, and strategic policy adjustments to navigate global trade headwinds and enhance India's export competitiveness in the international market.
Industry Submits Pre-Budget Memorandum
The Gem and Jewellery Export Promotion Council (GJEPC) has formally presented its pre-Budget memorandum to Finance Minister Nirmala Sitharaman. The document outlines specific measures designed to reduce operational costs for exporters while strengthening India's position within the global diamond trade and value discovery ecosystem.
Addressing Global Market Transformations
"The global gem and jewellery trade is undergoing a significant transformation," stated GJEPC chairman Kirit Bhansali. "With escalating US tariffs, evolving consumer preferences, and shifting global supply chains, it has become imperative for India to maintain and enhance its competitive edge."
According to Bhansali, the council's proposals concentrate on three key areas: improving cost efficiency, reinforcing Special Economic Zone (SEZ) operations, and refining policy frameworks that encourage investment and skill development. He emphasized that with supportive reforms and a stable trade environment, India could not only withstand current global pressures but also drive the next phase of growth in the international jewellery market.
Key Recommendations from Export Promotion Council
The GJEPC has raised specific concerns regarding the existing 4% Safe Harbour tax, arguing that it remains prohibitively high and discourages international trade activity. The council has called for rationalization of import duties on both cut and polished diamonds as well as coloured gemstones to help Indian exporters maintain global competitiveness.
Modernizing Customs Procedures
In a significant move, the GJEPC has sought amendments to the Customs Act of 1962 to align customs procedures with the needs of a rapidly evolving, export-oriented gems and jewellery sector. Their recommendations include implementing risk-based customs clearance systems, introducing AI-enabled digital appraisals, and establishing self-certification mechanisms for trusted exporters. These measures aim to improve operational efficiency, enhance transparency, and reduce turnaround times for international shipments.
Domestic Council's Separate Representation
Separately, the All India Gem and Jewellery Domestic Council (GJC) has submitted its own representation to the government, focusing primarily on GST rationalization, hallmarking standards, direct tax reforms, and sector-wide improvements.
GST Rationalization Proposal
"GST on gold and silver jewellery should be rationalized to 1.25 percent from the current 3 percent," asserted GJC chairman Rajesh Rokde. "This adjustment would help restore proportionality, reduce financial stress on households, and enable a wider base of taxed transactions within the formal economy."
The GJC has also proposed exempting capital gains tax on exchanges of hallmarked jewellery, provided the proceeds from such sales are immediately reinvested in new jewellery purchases. This measure would ensure continuity of asset holding while encouraging transactions within the organized sector.
Tourist GST Refund Scheme Implementation
Another critical demand from the domestic council relates to the operationalization of the Tourist GST Refund scheme. The GJC has urgently requested the government to notify the required rules and establish digital claim and verification systems at major international gateways.
Phased Pilot Program Recommendation
The council has suggested beginning with a phased pilot program at Delhi, Mumbai, and Bengaluru airports, citing higher levels of jewellery sales and foreign tourist arrivals at these locations. "Foreign tourists, particularly from the Middle East, Europe, and the United States, face a tax-inclusive price disadvantage when purchasing jewellery in India compared to regional competitors like the UAE and Singapore," explained Rokde.
He further highlighted that these competitors efficiently process such refunds through automated airport systems, creating a competitive disadvantage for India. "This results in a lost opportunity for our country," Rokde noted, "wherein foreign buyers either defer purchases or procure jewellery abroad, converting India's competitive craftsmanship into exported retail demand losses."
The industry's comprehensive recommendations reflect a strategic approach to addressing both domestic challenges and international competitive pressures as India positions itself for sustained growth in the global gems and jewellery market.
