The jewellery and gem industry in India could yet be exempted from a new service tax being proposed by the government in its latest budget.

According to Rapaport News, sources in the Gem & Jewellery Export Promotion Council (GJEPC) say they have been "assured" that an exemption will be forthcoming after months of lobbying.

The tax proposals would see 10.2 per cent added to the cost of processing stages in the jewellery trade, such as polishing and cutting - resulting in a marked increase in price for the final product.

However, meetings with the GJEPC and the government now appear to have borne fruit, although there could yet be further difficulties with the planned imposition of a two per cent tax on branded jewellery.

Jewellers in India recently staged a three-day strike against the excise duty on branded jewellery proposed in the budget, with GJEPC and the Karol Bagh Jewellers Association among those organisations taking part.

During the last calendar year, total exports of the Indian gems and jewellery sector were $14.33 billion, up around 38 per cent from the previous year.

Platinum has played an increasingly important role in that development, with Tanishq - a major Indian jewellery store - recently reporting that it has recorded strong profits on the back of improving platinum sales.

One of the key tenets of this success was the performance of platinum and diamonds, with general manager V Govind Raj telling Business Standard that the demand for "branded platinum jewellery is also increasing".