India’s diamond sector has asked the government to reduce import duties for polished, arguing that a lower rate would boost the country’s position as a trading hub.
The Gem & Jewellery Export Promotion Council (GJEPC) wants import tax to drop to 2.5% from its current rate of 7.5%, it said in a statement Wednesday July 8. The government raised the tax level in September 2018, making it more expensive for companies to send polished diamonds from elsewhere in the world to India.
“India is the undisputed leader in diamond manufacturing and aims to become the largest trading center globally,” a GJEPC spokesperson told Rapaport News. “This would be achieved if a larger volume of diamonds…came to India for further distribution. Currently, [this] is done through Hong Kong or Dubai.”
GJEPC chairman Colin Shah, vice chairman Vipul Shah and executive director Sabyasachi Ray met with Finance Minister Nirmala Sitharaman in a video call on Monday July 6 to propose the measure.
The council also urged the government to let miners sell rough diamonds in India’s SNZs — dedicated trading centers in which producers can hold viewings without incurring income tax. As actual sales are taxable, around 60% of the rough currently returns to Dubai or Antwerp for the transaction to take place, with importers then shipping the goods back to India at a cost, the GJEPC explained.
According to the GJEPC’s proposal, miners would issue an invoice at the SNZ and pay tax of no more than 0.16% of revenue, a comparable rate to that in Belgium.