The Indian government will allow companies to import a portion of natural polished diamonds under 0.25 carats free of duty under a program that went into effect this week.
The Diamond Imprest Authorization scheme is open to businesses with “two-star” export status or higher that ship out at least $15 million worth of goods per year, the Ministry of Commerce & Industry said in a statement on Tuesday.
However, the concession only applies to an amount equivalent to 5% of a company’s average annual exports for the previous three financial years and to a maximum value of $15 million, the ministry explained in a separate notification.
India’s 5% import duty on polished diamonds has been a sticky topic for the industry. While designed to protect the country’s manufacturing sector, it makes it expensive for companies to bring unsold goods back into the country after shipping them overseas.
The policy has also created difficulties for De Beers sightholders that have established cutting facilities in African nations, as it is inefficient from them to send finished stones to Mumbai — their main marketing hub — for sale.
The impact of the new program on African manufacturing factories will be limited, as these focus on larger goods. Industry members described the scheme as a symbolic move that might lead to greater concessions in the future.
India’s Gem & Jewellery Export Promotion Council, which has been campaigning to reduce the tax rate, welcomed the government’s announcement. “By enabling value addition and enhancing competitiveness, the scheme will rejuvenate our industry and pave the way for sustained growth and global excellence,” said GJEPC chairman Vipul Shah.
Image: Melee diamonds under analysis at De Beers premises in Surat, India. (Ben Perry/Armoury Films/De Beers)
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