The gem and jewellery industry, the second highest foreign exchange earner in the country, has demanded a cut in duties on coloured gems and zircons to make India an international jewellery trading centre.

Speaking on Wednesday, Gitanjali Group chairman Mehul Choksi said that the industry was concerned about certain "retrogressive taxes" that have come into effect in the past few years.

"Being such a huge contributor to forex reserves, issues concerning this industry need to be dealt with very carefully as it can have repercussions not only on the trade but also the economy as a whole," Choksi said.

"In order to bring it on par with the other countries in the world, apart from reducing duties on coloured gemstones and zircons, there is a need to reduce duties on finished jewellery for 18 and lower karats."

Since this is an industry with high volumes but low margins, this duty stunts its growth, Choksi added.

At the same time, excise duty on branded jewellery must be abolished in order to encourage the segment, which could enable better evaluation of the industry on a global level, he said.

Moreover, since India was still in the nascent stage for jewellery branding, creating a brand equity fund could support the initiative.

Choksi said that the country could combat the ill effects of the falling dollar by consistent policies to support special economic zones (SEZs) that would allow greater growth for diamond operations.

He said that these steps would lead to incremental fund flow into the country and help achieve the industry's targets of making India an "international jewellery-trading hub".