The finance ministry is planning to impose the 10 per cent customs duty on cut and polished synthetic diamonds since jewellers have allegedly sold these laboratory-manufactured diamonds at an inflated price.
The price of man-made diamonds is cheaper than the natural ones to the tune of 30-60 per cent, which can be used to cheat the customers. To protect the interest of the natural diamond industry, it is imperative to consider customs duty on cut and polished synthetic diamonds at par with similar stones which is currently 10 per cent, a senior finance ministry official said.
The gems and jewellery export promotion council too had cautioned the government that it has been receiving complaints. This apex body of gems and jewellery exporters had in November constituted a National Diamond Monitoring Committee to ensure segregation of natural and lab-made diamonds in the market.
The industry needs to make sure that the consumer confidence in the industry is maintained through segregation of natural and man-made diamonds value chain and disclosures at every step, a source said.
As an additional measure to protect the consumers interest, the finance ministry is likely to impose 5 per cent duty on rough synthetic diamonds, which are mostly grown in laboratories. This is likely to happen again at the behest of the GJEPC, which has also demanded transparent declaration and proper nomenclature for lab grown diamonds to protect the interests of natural diamond traders and sellers.
However, conscious of the increasing competition from nations like China and Thailand in processing and polishing of coloured gemstones, the government is planning to abolish a 2 per cent import duty on cut and polished and coloured gemstones. The industry has earlier this year conveyed to the NDA government that the import duty was acting as a deterrent in the expansion of their business. The total export of coloured gem stones in 2012-13 was $651 million, which accounted for 1 per cent of the total export basket of gems and jewellery.
According to the Minerals and Metals Trading Corporation, the country imported Rs 5025.52 crore of cut and polished diamonds during the past two months against Rs 5135.04 crore in the same period last year. The total imports from April 2013 to March 2014 has been Rs 39,586.76 crore.