Maharashtra may reduce diamond octroi

The Maharashtra government will consider a revision of octroi on diamonds following the demand by the Gems and Jewellery Export Promotion Council (GJEPC).

The jewellery industry's apex body also suggested rationalising the turnover tax rates, introduced in the budget, the Centre. While speaking at the 4th International Gold and Diamond Convention organised by Assocham, Sanjay Kothari, chairman, GJEPC raised concerns about Mumbai loosing business to other states due to high octroi duty.

"Following the abolishment of octroi duty, Surat has imported diamonds worth $2 billion while Mumbai imported a mere $40 million worth diamonds. The state government must cut octroi on diamonds or reduce as the business is shifting away from Mumbai," Kothari said.

Currently, two per cent octroi is levied on diamonds in Mumbai while duty on gold is 0.01 per cent.

Responding to the concerns, Chief Minister Vilasrao Deshmukh said, "The government wants the gems and jewellery industry in the state to grow, as Maharahstra contributes more than 50 per cent of the nation's total exports. Though easing of octroi is a valid point, the government will take up the issue with the municipal corporation to examine how best the octroi rates can be reduced."

He added, however, that the abolishing of duty would take some time as the government intends to undertake the drive in a phased manner, beginning from smaller corporations.

The chief minister also heeded to the industry's demand of allocating land to develop a convention centre in Navi Mumbai or near the Port Trust. The government has already allocated an 8-acre plot to Reliance Industries to develop an international convention centre at Bandra Kurla Complex.

"One centre will not suffice, as the city is expected to attract more international conventions. The government is willing to allot other plots and would co-ordinate with CIDCO and MHADA for the same," Deshmukh added.

In his address, Kothari also urged the central government to rationalise the turnover tax from 8 per cent to 3 per cent.

The finance minister had imposed the turnover tax regime on diamond processing units with net profits of more than 8 per cent. "The turnover tax slab needs to be reduced if India wants to become a one-stop-shop for jewellery."

Kothari said gems and jewellery exports have registered 21 per cent growth in spite of rupee appreciation and the slowdown in the US market.