Here comes the month of February and all eyes are set on the forthcoming union budget! The budget for 2010-11 is likely to be presented on February 26, two days ahead of the conventional date.

An overall feelings of the industry and trade community is that India should grow at a faster pace of 7.75% in the fiscal year to March 2010 against 6.7% in the previous year. But looking at the sky-rocketing price rises in grains and foodstuffs, the Finance Minister Mr. Pranab Mukherjee is likely to present a populist budget by keeping common man in the mind this time. So the FM is not likely to declare any major incentives for the Gem & Jewellery industry this year also.

The last budget was not very encouraging for the Gems and Jewellery export sector, with few incentives and aid offered to strengthen India's leadership position in the international market. Keeping in mind the challenges faced by the industry, including threat from the growing influence of a highly competitive China; worldwide fall in demand; the increasing unemployment of its highly skilled and world-class workforce; and the volatility of gold prices, the last budget had not considered implementation of some of the corrective measures recommended by the Gems and Jewellery Export Promotion Council (GJEPC) to give a fresh thrust and boost to the gems and jewellery export sector.

The recession has not only debilitated the industry from inside, but has also led it to the precipice of non-competitiveness and loss of market share. Exclusion of certain significant, corrective measures sought by the G&J industry last year from the Union Budget has slowed down the revival of this sector and which has lead to a setback in the export market.

The charter of recommendations made by the gems & jewellery sector which were not considered by the Finance Minister included increasing the flow of dollar liquidity to the industry which had a projected need of at least $3-4b in the this year. Such additional dollar finance was to be made available from the foreign exchange reserves of the country.

Citing the peculiar nature of the industry, characterized by daily price fluctuations, as a major cause for taxation dispute, the GJEPC had proposed the levy of a flat 1% Turnover Tax in place of all forms of current direct taxes, thereby doing away with arbitrariness, confusion and delays in finalization of tax returns. Owing to recessionary pressures, income on export earnings should have been made tax-free for the next two years.

Export credit limits sanctioned by the banks as on 01 April 2008 to exporters of the gem & jewellery industry should have been continued till 31 March 2011. Introduction of a duty draw back scheme for gold jewellery exports has been proposed by the GJEPC. The Council had also proposed the setting up of a long-term welfare fund jointly with the Government, with the aim of providing these workers with employment guarantees, training and other benefits; which has not even been considered in the welfare schemes.

The industry is hopeful this year that the FM will pay his kind attention towards revival of the G & J industry and fulfill all demands put forward by the industry leaders.