Jewellery Industry Pushes for Duty Reforms and GST Reductions in 2026 Budget

As India prepares for the Union Budget 2026-2027, the gems and jewellery sector is calling for significant duty reforms and GST reductions to improve its competitiveness on the global stage. The Gem and Jewellery Export Promotion Council (GJEPC) has submitted a memorandum to Finance Minister Nirmala Sitharaman, outlining key measures aimed at enhancing export capabilities.

Industry Challenges and Proposed Reforms

The GJEPC has emphasized the urgent need for reforms in the industry due to global trade challenges. Chairman Kirit Bhansali noted that high tariffs in the US, changing consumer trends, and shifting supply chains demand immediate action. The proposals seek to enhance cost efficiency and improve operations within Special Economic Zones (SEZs).

• Reduce the 4% Safe Harbour tax, which currently discourages international trade.
• Rationalize import duties on cut and polished diamonds and coloured gemstones to boost competitiveness.
• Amend the Customs Act of 1962 to modernize customs procedures.

These recommendations include implementing risk-based customs clearance and integrating AI for digital appraisals, thereby enhancing efficiency and transparency for exporters.

GST Rationalization and Other Demands

Meanwhile, the All India Gem and Jewellery Domestic Council (GJC) has also urged the government to consider GST reforms. GJC Chairman Rajesh Rokde proposed reducing the GST on gold and silver jewellery from 3% to 1.25%. This change would alleviate financial pressure on households and promote a broader tax base.

• Exempt capital gains tax on transactions involving hallmarked jewellery if proceeds are reinvested in new purchases.
• Activate the Tourist GST Refund scheme to attract international buyers.

The Council suggests piloting this scheme at major airports like Delhi, Mumbai, and Bengaluru, aiming to streamline the process for foreign tourists. This is particularly crucial as buyers from regions such as the Middle East, Europe, and the USA face disadvantages compared to competitors in places like the UAE and Singapore.

Conclusion

The initiatives proposed by the GJEPC and GJC are designed to reinforce India’s position in the global jewellery market. With favorable reforms and a stable trade environment, India can navigate current pressures and drive future growth. The call for duty reforms and GST reductions reflects the need for a more competitive framework, which could support the industry’s evolution and sustainability.