GEMS & JEWELLERY SECTOR It is an export Oriented Industry.

Keeping its ever increasing global market in view, India and Sir Lanka, our main competitors, have timely given several fiscal and administrative incentives for the development of the industry in their respective countries. Resultantly, exports of gems and jewellery from these countries witnessed manifold increase. Indias exports of Gems and Jewellery products in 2009 was US$ 32.6 Trillion, whereas Pakistan earned foreign exchange of US$ 0.46 Trillion, from export of these products in the same year, i-e Indias exports is about 7087% more than the Pakistans exports. This clearly shows that India, soon after independence

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in 1947, took effective measures for promotion and development of this sector. This also underscores the need to develop this industry in Pakistan on war footings. Given below are the proposals for the promotion and improvement of competitiveness of the indigenous gem and jewellery industry; Import duty on tools, machinery and equipment for gem and jewellery manufacturers should be lifted. Precious metal imports be liberalized Tax exemption on all export earnings for gem & jewellery industry be allowed. Fiscal and financial incentives should be given to companies investing in gems and jewellery manufacturing industry. All imports of precious metal and gems (diamond etc) should be exempted form duty and taxes. To protect gemstone reserves, mechanized tools based on latest technology should be used to exploit the reserves, and heavy machinery like bulldozers and excavators be banned. To establish a world class, internationally affiliated Gemstone Testing Laboratory for certification and research. To establish a regionally recognized free-standing Gem & Jewellery Training Institute, which should be affiliated to a leading international training institute. Export of gems & jewellery in raw or semi finished form should be banned and its export should only be allowed after achieving a certain level of value addition. Tax holiday against exports be allowed to the industry. R&D TYPE INCENTIVE TO GOLD AND JEWELRY SECTOR Pakistan exporters face cut throat competition with other countries particularly Malaysia and India where cost of production is less and indirect facilities are provided. It is therefore proposed that 3% incentive may be provided to this sector to boost the export. VALUE ADDITION NORMS FOR GOLD AND JEWELRY SECTOR While the ministry appreciating there genuine request revised the norms vide SRO 837 (I)/2007 as follows:

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4% of Gold price for bangle and chain. 6% of Gold price for other plain jewelry 9% of Gold price for studded or embedded Jewelry. Recently Gold price touched peak of US$ 1440 i.e. US$ 46.29 an increase of 139% from the date the value addition norms were revised in 2007. It is therefore proposed that Value addition norms with grammage favourably instead of value of gold which is totally unfair and inhabiting promotion of gold jewelry. The proposed value addition norms per gram are given as fallows. US$ 0.8 per gram for Bangle and Chain. US$ 0.90 per gram for other plain jewelry US$ 1.75 per gram for studded or embedded jewelry. 1% PENALTY FOR NON REALIZATION OF EXPORTS PROCEED OF GOLD JEWELRY 1% penalty has been introduced for non realization of export proceed within prescribed time period which is discriminatory as no other sector is subject to be penalty. SBP has its own mechanism to penalize the defaulter therefore 1% penalty be waived off. SALES TAX ON GOLD AND JEWELRY SECTOR Exporter are not subjected to sales tax however in SRO it is prescribed to pay sales tax and go for refund which is cumber sum and expensive process. It is propose that in serial no 9 para 1 after free of custom duty should be added and sales tax. WHT AND EDS ON GOLD JEWELRY SECTOR It is an unorganized sector. However 1% WHT and 0.25% EDS is charged like organized sector. The cost analysis of this sector consist 95% Gold component and 5% value added. Out of 5% gross profit, overhead, WHT, EDS and banking expenses are charged which left very little profit to induce the exporters to export Gold Jewelry. It is proposed that the WHT and EDF should be waved off.