With the Union Budget 2026 dropping on 1st Feb, 2026, organizations like GJEPC, GJC, and PGI have made some recommendations to the Honorable Finance Minister Nirmala Sitharaman. Industry bodies have urged Budget 2026 reforms to cut taxes, rationalise duties, simplify compliance, and extend incentives across diamonds, gold, platinum, and lab-grown diamonds to boost exports, domestic demand, and make India a global gems and jewellery hub
RECOMMENDATIONS BY THE ORGANIZATIONS
Recommendations made by Gems and Jewellery Export Promotion Council (GJEPC) are as follows:
Liberalised Taxation for Rough Diamond Trading
To position India as a global hub for rough diamond trading, GJEPC has recommended a liberalised and predictable taxation regime for foreign mining companies operating in Special Notified Zones (SNZs).
The Council has highlighted that the existing 4% Safe Harbour Tax is relatively high and discourages international trading activity.
Drawing inspiration from Belgium’s successful “Carat Tax” model, GJEPC has proposed a simplified and lower tax structure that would encourage foreign miners to trade rough diamonds through India.
According to the Council, this would enhance transparency, improve liquidity, and enable India to evolve into a global centre for diamond value discovery. Additionally, GJEPC hassought permission for reputed global diamond brokers to operate in India, further strengthening international participation and market credibility.
Duty Rationalisation on Cut and Polished Diamonds and Gemstones
To maintain export competitiveness, GJEPC has urged the government to rationalise import duties on cut and polished diamonds and coloured gemstones.
Currently, semi-processed diamonds imported from mining countries are classified as finished goods and attract a 5% Basic Customs Duty, significantly raising costs for Indian exporters. The Council has also pointed out that restrictions and high export duties imposed by rough gemstone–producing countries compel Indian jewellers to import finished stones, further eroding competitiveness.
To address this, GJEPChas recommended reducing the import duty on cut and polished diamonds and gemstones to 2.5%, while abolishing duties on rough gemstones. These measures are aimed at sustaining manufacturing activity, protecting employment, and supporting long-term export growth.
Ad-Valorem Duty Drawback for Gold and Silver Jewellery
To address sharp volatility in precious metal prices, GJEPC has proposed replacing the current fixed-rate duty drawback system with an ad-valorem, value-based mechanism.
Under the existing structure, exporters recover only about 75–80% of duties paid, leading to consistent losses—especially in a market where gold prices have fluctuated between ₹99,000 and ₹1,25,000 per 10 grams.
According to the Council, an ad-valorem system would ensure proportionate refunds aligned with export values, bringing predictability and financial stability across the jewellery export value chain.
Inclusion of Platinum and Gold Articles in the Duty Drawback Scheme
GJEPC has also recommended extending duty drawback benefits to platinum jewellery and gold articles, particularly for exporters operating in the Domestic Tariff Area (DTA). While platinum jewellery exports have grown nearly 17 times over the past five years, most of this growth has originated from SEZ units that already enjoy fiscal incentives.
Including platinum jewellery and gold articles under the duty drawback scheme would, as per GJEPC, create a level playing field between SEZ and DTA exporters, encourage diversification, and support India’s emergence as a global hub for platinum and high-end gold jewellery manufacturing.
Tax Refund Scheme for Foreign Tourists
To promote India as a luxury shopping destination, GJEPC has proposed a comprehensive tax refund scheme for foreign tourists purchasing jewellery. At present, only the GST component is refundable, while Basic Customs Duty and AIDC remain embedded in prices.
The Council has suggested a broader refund mechanism—similar to those in Dubai and Singapore—to enhance price competitiveness, boost tourism-driven retail demand, and reinforce Brand India in the global luxury market.
Enhancing SEZ Flexibility for Growth and Resilience
In response to global demand fluctuations, GJEPC has sought greater operational flexibility for SEZ units. Key proposals include permitting reverse job work for domestic orders during export slowdowns, allowing clearance of unsold inventory into the Domestic Tariff Area upon payment of applicable duties, and simplifying logistics through a “Bill to Ship to” mechanism.
These reforms are aimed at preventing idle capacity, safeguarding employment, and strengthening India’s manufacturing ecosystem.
Customs Act Amendments and Procedural Simplification
To align regulatory processes with the needs of a fast-evolving export industry, GJEPC has urged amendments to the Customs Act, 1962. The Council has recommended risk-based customs clearance, AI-enabled digital appraisals, self-certification for trusted exporters, and uniform SOPs across ports to improve speed, transparency, and cost efficiency while reducing procedural bottlenecks.
Extension of Duty Exemption on Lab-Grown Diamond Seeds
Recognising India’s leadership in lab-grown diamonds, GJEPC has recommended extending the duty exemption on imported LGD seeds beyond March 2026. Since the industry remains dependent on high-quality imported seeds, the Council has stressed that continuing this exemption is critical for maintaining cost competitiveness and preserving India’s global leadership in the rapidly expanding LGD market.
Recommendations made by Platinum Guild International (PIG) is:
PIG has highlighted the growing demand for platinum jewellery in international markets such as the UAE, GCC countries, South East Asia, and the UK. PIG has emphasised that Indian manufacturers possess the design capabilities, technical skills, and production capacity to meet this demand competitively.
However, the Guild has noted that most export growth currently comes from SEZ-based manufacturers, leaving DTA exporters at a disadvantage. PIG has recommended the inclusion of platinum jewellery under the duty drawback scheme to ensure equal opportunities, attract new investments, generate skilled employment, and strengthen India’s position as a global platinum jewellery manufacturing centre.
Some recommendations were made by the Gem and Jewellery Domestic Council as well to address the GST and Compliance reforms to revive domestic demand: –
1. Reduction of GST on gold and silver jewellery from 3% to 1.25%, or a uniform 1.5% across the sector on a revenue-neutral basis
2. Refund of accumulated ITC on input services or reduction of GST on key services such as rent, security, and logistics from 18% to 5%
3. A clear circular affirming 5% GST on jewellery job-work services to protect karigars
4. One-year deferral of income tax on unrealised inventory appreciation caused by gold price rise in FY 2025–26
5. Exemption from capital gains tax on exchange of hallmarked jewellery when reinvested in new jewellery
6. Immediate rollout of the Tourist GST Refund Scheme at major airports
7. Simplified compliance norms for MSME jewellers, including higher turnover thresholds and protection from duplicate notices
8. A policy framework for digital gold, rationalised MDR on credit cards, and formal EMI options for hallmarked 22-karat jewellery
Together, the recommendations from GJEPC, GJC, and PGI reflect a shared vision: to enhance India’s global competitiveness, stimulate domestic consumption, protect employment, and position the country as a trusted, transparent and globally integrated gems and jewellery powerhouse.
With timely policy action in Budget 2026, the sector believes India can unlock its full potential across diamonds, gold, platinum and emerging categories like lab-grown diamonds—driving sustainable growth for years to come.
FAQs
1. What reforms is the industry seeking in Budget 2026?
Industry bodies like GJEPC, PGI, and GJC have urged tax rationalisation, duty reductions, simplified compliance, and extended incentives for diamonds, gold, platinum, and lab-grown diamonds to boost exports and domestic demand.
2. How will diamond trading be affected?
GJEPC recommends liberalised taxation for rough diamond trading in Special Notified Zones and permitting global diamond brokers to operate in India, aiming to make the country a global hub for diamond value discovery.
3. What changes are proposed for gold, silver, and platinum jewellery?
The industry wants an ad-valorem duty drawback system for exports, inclusion of platinum and gold articles under duty benefits, and GST reductions to stabilise costs, encourage domestic sales, and protect employment.
4. How is lab-grown diamond growth being supported?
GJEPC suggests extending the duty exemption on imported lab-grown diamond seeds beyond March 2026 to maintain India’s cost competitiveness and leadership in this emerging segment.
5. What measures are aimed at boosting tourism and exports?
A comprehensive tax refund scheme for foreign tourists, easier customs procedures, and enhanced SEZ flexibility are proposed to attract global buyers, ensure operational resilience, and strengthen India’s position as a global gems and jewellery hub.
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