Hike in customs duties by the government on diamonds and coloured gemstones, among a total 19 non-essential items, will impact jewellery exporters, industry body GJEPC said.
However, rise in duty on jewellery to 20 per cent from 15 per cent, it feels, is good for the industry.
The government Wednesday increased the customs duty on categories of diamond such as semi processed, half cut or broken, and cut and polished coloured gemstone to 7.5 per cent, from 5 per cent earlier, in a move to narrow the current account deficit (CAD).
"The increase in customs duty on jewellery is good for the industry. However, the increase in duty on diamonds is going to impact the exporters," Gem Jewellery Export Promotion Council (GJEPC) vice chairman Colin Shah told PTI.
He said, even the 5 per cent duty was not so good for the exporters and to increase it further will impact more as the cost of business will go up.
Shah said the exporters are hoping that once the rupee become stronger, the Centre will re-look at this duty hike.
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The government said curbing non-essential imports was part of the five-pronged steps announced by the government to check widening CAD and capital outflows.
Brent breached the USD 80 per barrel mark Monday and analysts at Bank of America Merrill Lynch said they expect it to go up further to USD 95 by June 2019, which will put pressure on the current account.
The widening current account gap is one of the major concerns which is putting pressure on the rupee, which has depreciated around 13 per cent against dollar this year.
The CAD, the difference between inflow and outflow of foreign exchange, widened to 2.4 per cent of GDP in June quarter.
All India Gem And Jewellery Domestic Council's former chairman, Manish Jain, said, the increase in duty on jewellery is a welcome move for the industry.
"However, the 2.5 per cent duty hike will impact the industry as the price of diamond and coloured stone jewellery will increase by 2-3 per cent," he added.
However, he was quick to add that as the diamond and coloured gems stone constitute only 5-10 per cent of the total domestic jewellery industry, the impact will not be that high and can be adjusted.