Govt proposes Rs 200 crore tech fund for small manufacturers of diamonds
Updated: Apr 05, 2013 07:19:34pm
New Delhi, April 5 (KNN) A government-appointed expert group has suggested creation of a Rs 200 crore Technological Upgradation Fund Scheme (TUFS) to enable small manufacturers of diamonds and diamond-studded jewellery gain access to the latest manufacturing technologies to compete with China in the global market.
“Create a Rs 200 Crore Technological Upgradation Fund Scheme (TUFS) to enable small manufacturers of diamonds and diamond studded jewellery to gain access and equip themselves with latest manufacturing technologies,” says the report of a task group for diamond sector.
The department of commerce constituted a task group for diamond sector which came up with some suggestions to deal with a downturn phase.
According to the report, “China through governmental interactions and aids, is pushing through direct deals with the African governments for the supply of rough diamonds which would put it in a strong position to merge as a major diamond manufacturer in the world.”
The total exports of Indian cut and polished diamonds during financial year 2011 - 12 and 2012-13 (Apr-Dec) witnessed decline of 17 per cent and 36 per cent respectively.
Therefore, the report in order to make India an International trading hub for rough diamonds has suggested some legislative measures like a presumptive taxation regime in the long run.
It said the finance ministry should start reducing the net profit rate for computation of Income Tax under the benign assessment procedure (BAP) introduced in 2007-08, from 6 per cent to 2.5 per cent so that exporters are encouraged to opt for the same.
Keeping the interest of taxpayers, size of tax collection and compliance a block benign taxation regime may be introduced in future. This measure will be tax accretive with a realistic threshold rate.
Apart from this, other measures recommended by the task group include allowing duty-free reimport quota for cut and polished diamonds to the tune of 15 per cent of the previous three year’s average exports, establishment of Special Notified Zones (SNZ) for import and trading of rough diamonds, where net income is fixed and taxes be paid only on invoices raised to Indian companies.
Some policy related measures include, establishment of a special fund by Reserve Bank of India (RBI) to the tune of USD three-five billion for the refinance of borrowing given to non-petroleum export industries, which have a high import content of more than 70 per cent of their exports.
In case of inability of the government to provide such facility, such sectors should be allowed to arrange for European Central Bank (ECB) in foreign currency for their working capital requirements for purchase of raw material.
Under policy related measures, two per cent interest subvention scheme should be extended for the entire gem and jewellery exporters as it was done in 2008-09.
There are also some procedure related measures like reduce documentation requirements at customs for exports from 23 to 12 documents as suggested and agreed during the previous task group formed for the industry in the year 2006.
Additional measures include pursuing Free Trade Agreements (FTAs) with countries which are consumers of diamonds and diamond studded jewellery, but have prohibitive import duties on diamonds like Brazil and Russia.
Government may establish a fund partnering with the industry for generic promotion of diamonds and promotion of Indian-made jewellery, in major consuming markets.
In order to develop skills in the sector, diamond appreciation and its cutting and designing shall be introduced as a vocational course in Central Board of Secondary Education (CBSE) and other schools from ninth standard.
Gujarat will be a pilot state for this programme.
The report also suggests to launch a programme to upgrade the small diamond processing job-working units and undertake the task of preparing training manuals for all job functions at the entry level in the diamond processing sub-sector.
Though India’s share in the USA has started declining, the industry strongly believes that USA will continue to be a strong global trading partner, according to the report.
USA is the major market for diamonds as Indian exports to the USA are pegged at USD 6.1 billion higher than that from Belgium and Israel.
Dubai has started strongly emerging as global diamond trading centre. (KNN)
“Create a Rs 200 Crore Technological Upgradation Fund Scheme (TUFS) to enable small manufacturers of diamonds and diamond studded jewellery to gain access and equip themselves with latest manufacturing technologies,” says the report of a task group for diamond sector.
The department of commerce constituted a task group for diamond sector which came up with some suggestions to deal with a downturn phase.
According to the report, “China through governmental interactions and aids, is pushing through direct deals with the African governments for the supply of rough diamonds which would put it in a strong position to merge as a major diamond manufacturer in the world.”
The total exports of Indian cut and polished diamonds during financial year 2011 - 12 and 2012-13 (Apr-Dec) witnessed decline of 17 per cent and 36 per cent respectively.
Therefore, the report in order to make India an International trading hub for rough diamonds has suggested some legislative measures like a presumptive taxation regime in the long run.
It said the finance ministry should start reducing the net profit rate for computation of Income Tax under the benign assessment procedure (BAP) introduced in 2007-08, from 6 per cent to 2.5 per cent so that exporters are encouraged to opt for the same.
Keeping the interest of taxpayers, size of tax collection and compliance a block benign taxation regime may be introduced in future. This measure will be tax accretive with a realistic threshold rate.
Apart from this, other measures recommended by the task group include allowing duty-free reimport quota for cut and polished diamonds to the tune of 15 per cent of the previous three year’s average exports, establishment of Special Notified Zones (SNZ) for import and trading of rough diamonds, where net income is fixed and taxes be paid only on invoices raised to Indian companies.
Some policy related measures include, establishment of a special fund by Reserve Bank of India (RBI) to the tune of USD three-five billion for the refinance of borrowing given to non-petroleum export industries, which have a high import content of more than 70 per cent of their exports.
In case of inability of the government to provide such facility, such sectors should be allowed to arrange for European Central Bank (ECB) in foreign currency for their working capital requirements for purchase of raw material.
Under policy related measures, two per cent interest subvention scheme should be extended for the entire gem and jewellery exporters as it was done in 2008-09.
There are also some procedure related measures like reduce documentation requirements at customs for exports from 23 to 12 documents as suggested and agreed during the previous task group formed for the industry in the year 2006.
Additional measures include pursuing Free Trade Agreements (FTAs) with countries which are consumers of diamonds and diamond studded jewellery, but have prohibitive import duties on diamonds like Brazil and Russia.
Government may establish a fund partnering with the industry for generic promotion of diamonds and promotion of Indian-made jewellery, in major consuming markets.
In order to develop skills in the sector, diamond appreciation and its cutting and designing shall be introduced as a vocational course in Central Board of Secondary Education (CBSE) and other schools from ninth standard.
Gujarat will be a pilot state for this programme.
The report also suggests to launch a programme to upgrade the small diamond processing job-working units and undertake the task of preparing training manuals for all job functions at the entry level in the diamond processing sub-sector.
Though India’s share in the USA has started declining, the industry strongly believes that USA will continue to be a strong global trading partner, according to the report.
USA is the major market for diamonds as Indian exports to the USA are pegged at USD 6.1 billion higher than that from Belgium and Israel.
Dubai has started strongly emerging as global diamond trading centre. (KNN)
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