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Budget reactions: Surat's diamond industry's expectations remain unmet

However, the sector hopes that demand will rise as spending capacity improves

Naini Thaker
Published: Feb 1, 2019 06:02:13 PM IST
Updated: Feb 1, 2019 06:57:41 PM IST

Budget reactions: Surat's diamond industry's expectations remain unmetImage: Shutterstock
Last month, Forbes India travelled to three agri and small enterprise hubs to gauge the pain of business owners, farmers and workers and the expectations they had from the interim budget. We revisit the distressed Marathwada region, the silk hub of Ramanagara and the diamond traders in Surat to see whether the last budget before the general elections lived up to their hopes.

Location: Surat, Gujarat
Industry: Diamond Industry
Size: Approximately Rs 1 lakh crore

The Nirav Modi scandal, the depreciating rupee and the implementation of the Goods and Services Tax on labour were reason enough for Surat’s diamond industry to have lost its sparkle. While there was a long list of expectations, the diamond industry was prepared to not have its demand met this Interim budget.

“The increase in the income tax limit from Rs 2.5 lakh to Rs 5 lakh will mean an increase in savings and in people's spending capacity. This will indirectly benefit the diamond industry,” says Dinesh Navadiya, regional chairman, Gems and Jewellery Export Promotion Council, adding that schemes such as the PM Kisaan Samman Nidhi where farmers are to get Rs 6,000 per year are refreshing changes. 
Post the recession in 2000, about 3 lakh people have already left the diamond industry, and with the fluctuating rupee and the 5 percent GST on labour, a crunch in working capital has made it tougher to do businesses in the Surat sector. “We hope that the capital infused in the banking sector and banks coming out of Prompt Corrective Action (PCA) will help solve the shortage of working capital for our exporters,” explains Pramod Kumar Agrawal, Chairman, GJEPC.

The diamond industry, however is still hoping the government eliminates the 5 percent GST on labour and that banks become more supportive in giving them loans. The sector also wished for a 2 percent turnover tax. The hope is that these demands will be addressed during the declaration of the full budget after the elections.

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