To increase exports of gems and jewellery to USD 70 billion by 2025, the industry in its Budget recommendations has sought a reduction in import duty on cut and polished diamonds to 2.5 per cent from the present 7.5 per cent among others.
The Gem and Jewellery Export Promotion Council of India (GJEPC) in a statement said that it has also proposed for amendment in taxation provisions to allow the sale of rough diamonds in the Special Notified Zone (SNZ) in Mumbai, exemption and clarification of 2 per cent equalisation levy on rough diamond sales, according to the recommendation.
India was observed to gain world market with increase in its exports of diamonds from merely USD 5 billion in 2001 to USD 22 billion in 2010, GJEPC said.
With this, the country had overtaken Israel in 2008, as the top-most exporter of the diamonds in the world that held 27.28 per cent of polished diamonds exports in the world.
With 14 out of 15 diamonds now being processed in India, and little room left to grow vertically, there is a significant movement within the industry to eke out the remaining competitive advantage that will help the country to grow as the diamond manufacturing and trading hub of the world and double total gem and jewellery exports from the current USD 35 billion to USD 70 billion.
“We do not have any natural advantage of rough diamonds, but India has achieved this position because of its proficiency in cutting and polishing rough diamonds,” the association said.
In 2019, India imported maximum rough diamonds of around 157 million carats for processing.
“We have the capability to sustain this position and further scale new heights. We have requested the finance minister that if customers in India choose to confirm their orders, an invoice can be made within the SNZ. Miners could pay a ‘turnover tax’ not exceeding 0.16 per cent (the prevailing rate in Belgium),” GJEPC chairman Colin Shah said.
Due to COVID-19, all the transactions and diamond trade happens over e-commerce portals, he said, however as per the proposed 2 per cent equalisation levy on e-commerce trade this financial year, the additional taxation is like a burden to the trade fraternity.
“Covid-19 has pushed all our trade to happen over e-commerce. Already, due to the challenges brought in by the pandemic, the industry has faced heavy loss of exports and now followed by additional 2 per cent EL tax is unfair to the industry. In our last meeting with finance minister, we had proposed to remove it and we are hopeful that it will be amended soon,” Shah added.