Polished diamond imports fall by 80%.

SURAT: Gems and Jewellery Export Promotion Council (GJEPC), the apex body of the Indian diamond industry, has expressed satisfaction over decline of about 80% in the polished diamond imports in February following the levy of 2% import duty by the government.

GJEPC authorities said the sharp fall in polished diamond imports in the country has resulted in curbing of round-tripping of diamonds - a series of exports and imports of the same goods for the purpose of receiving greater bank financing - through import duty levy.

"Taxing polished diamond imports has stopped round-tripping of diamonds leading to sharp decline in exports as well. India exported $1.44 billion worth of polished diamonds in February, a 53.7% drop compared to February 2011," said a top GJEPC functionary.

As per the import-export statistics released by GJEPC, the polished diamond imports sank 80% to just $476 million in February compared to the same month in the previous year.

The volume of exports in February 2012 declined by 69% to 1.4 million carats from the 4.5 million carats imported a year before.

Sources said government kept a close watch on the industry after GJEPC released its statistical report on the import of gems and jewellery in 2010-11, which showed huge import of polished diamonds worth $20 billion, an increase of 57% compared to previous year.

After a detailed analysis, government concluded that the import of polished diamonds rose significantly after 2008 as a result of the then Union finance minister P Chidambaram scrapping the 3% import duty.

After 2008, diamond traders risked the bank loans through round-tripping of diamonds. The practice was to use cheap finance to cover repeated exports of the same diamonds that had been imported. The funds helped shore up the balance sheet and show increased turnover.

Source : timesofindia.indiatimes.com