Budget 2023: Govt to cut import duty on raw material for lab-grown diamonds

Lab-grown diamonds (LGDs) to become costlier as demand will pick up following the government’s move to boost the sector in the Union Budget 2023. Prices of imported gold jewellery will go up as the government has increased duty from 20 per cent to 25 per cent and a rise in import duty on silver bar to 5% from 2.5 per cent will lead to a rise in the final price of locally made silver jewellery.

Imported imitation jewellery also become costlier as the government has increased duty from 22% or Rs. 400/kg, whichever is higher to 25% or Rs. 600/kg, whichever is higher.’

As the government has said that LGDs are comparable to natural diamonds, there will be a shift from natural diamonds to LGDs which will result in prices to move up.

The move to not impose any capital gains on the conversion of physical gold to electronic gold receipts and vice versa will help further gold monetization scheme. This announcement may help in reducing the import of gold.
Pooja Sheth Madhavan MD & Founder, Limelight Lab Grown Diamonds said “The government for the first time has spoken of the identity of lab grown diamonds and said that it has the same properties as natural diamonds. This in itself is going to instil huge amount of consumer confidence in lab grown diamonds and we will be a seeing a huge shift in consumer preference towards LGDs in India.”

“This kind of awareness created by the government in the product is going to significantly boost the demand for LGDs amongst consumers in India and likely to keep the retail pricing of lab grown diamond studded jewellery remain stable or increase. This will come despite the budget announcement of reduction in import duties on seeds as its impact on the pricing of the product is minimal and a boost in demand will likely push prices higher. Mainly because India today has less than 10,000 growing machines and the consumption capacity of India can far outpace the current supply of LGDs,”she added.

Vipul Shah, chairman of Gem & Jewellery Export Promotion Council (GJEPC) said “Prices of imported jewellery will go up following the increase in import duty on articles of precious metals. This will give a boost to the local manufacturing.”