The All India Gems and Jewelery Trade Federation (GJF), the national federation for the promotion and expansion of trade in gemstones and jewelry throughout India, sent a letter to the Minister of Finance, Mr. P. Chidambaram, in which she called for immediate reforms to return letters of credit and other instruments for buying gold on credit, to lift restrictions on advance payment and to carry out transactions with payment on delivery, and to reduce the import duty to 5%.
In a letter to the Minister of Finance, GJF chairman Haresh Soni stated: "When the import of gold is limited by the 80:20 scheme (20% of imported gold should be exported), there is no chance of an increase in imports until there is a growth in total exports. In this regard, we ask you to authorize the use of letters of credit ("gold loans") to jewelery manufacturers, wholesalers and retailers. This practice they adhered to the recent past. However, this scheme dominates in many countries due to the volatility of gold prices and is intended to support manufacturers, wholesalers and jewelry retailers, allowing them to provide working capital as a mechanism to protect against price fluctuations. "
"Secondly, because of the high duty on the import of gold in the country, smuggling is actively spreading, as recently reported by the media. We believe that the time is not far off when the sector will be managed by unscrupulous people and anti-social groups. This underground economy will damage and destroy the basis of our industry. Many entrepreneurs have invested heavily in creating infrastructure for the production of world-class jewelry. Such treatment of the jewelry sector will lead to huge economic losses and will cause unemployment.