Indian Diamond, Jewelry Industry Disappointed by Budget

India's diamond and jewelry industry received a double-whammy from the 2005-06 budget with the announcement of a two percent tax on branded jewelry while a long hoped-for abolition of the five percent tax on polished diamonds imports was not announced.

Finance Minister P. Chidambaram presented the two percent tax on branded jewelry as a gesture to the less well off: while those who could afford more expensive jewelry would pay extra, excise duty on imitation jewelry would be cut to eight percent from 16 percent.

The Indian diamond and jewelry community believes the budget announcements will not lead to growth in the industry, however, and will only serve to create extra bureaucracy.

The Indian branded jewelry market has taken off in recent years as the country's rapid economic expansion has created a growing middle class.