Policy vacuum, tax rigidities weigh on gem and jewellery industry

The parliamentary Committee on Public Finance has flagged deep-rooted policy and regulatory weaknesses constraining the country’s gem and jewellery industry, calling for a comprehensive national framework to unlock export growth and attract investment.

The issues were discussed at a committee meeting held in Parliament on January 27, chaired by Dr. Harsha de Silva, with deputy ministers and lawmakers engaging industry stakeholders representing multiple segments of the value chain.

Industry representatives told the committee that the absence of a long-term national policy has created uncertainty and fragmented regulation, weakening Sri Lanka’s competitiveness in a sector that remains a key foreign exchange earner. They urged authorities to move beyond ad hoc measures and adopt a clear, export-oriented strategy.

Among the proposals put forward were the relaxation of existing regulations to facilitate exports, a review and restructuring of the National Gem and Jewellery Authority, and the introduction of safe harbour rules for income tax. Stakeholders also called for VAT reforms tailored to the industry, tighter regulation of foreign entities operating informally, and stronger incentives to attract foreign investment.

Operational constraints were also highlighted, including the prohibition on scanning equipment during gem mining operations and the shrinking availability of land for mining, both of which industry players said were hampering productivity and expansion.

Dr. de Silva said the committee plans to consolidate these concerns into a comprehensive discussion paper and engage senior officials from relevant ministries in follow-up deliberations.