Gems & Jewellery Sector

Gems and Jewellery: Neutral
 
Budget Proposals

* Basic customs duty is being reduced from 7.5 per cent to five per cent for specified gems and jewellery machinery
* Excise duty of one per cent is being imposed on branded jewellery and branded articles of precious metals
 
Budget Impact

The reduction of custom duty on machinery for specified gems and jewellery will positively impact companies like Rajesh Exports, Titan Industries etc. These companies are engaged in manufacturing and selling (including exports) of gems and jewellery. This will reduce the cash outflow for these companies, albeit not significantly, having a positive effect on them. But the second provisions of imposing an excise duty of one per cent will definitely take away some sheen from these companies. This is likely to reduce the demand for branded jewellery but it is not going to hit the companies significantly as demand for these products will remain inelastic for such minor increase in price (utmost Rs 31/gm). Therefore overall this budget will be neutral to this sector.