'Import-free duty quota on diamonds to boost trade'.

SURAT: The Israeli government's decision to bring down the import duty on polished diamond from 0.135 per cent to 0.1 per cent will boost its local diamond industry. However, this could hit the Indian diamond industry as the import duty on polished diamond in India remains still at 2 per cent.

Industry sources said the import duty on cut and polished diamonds was imposed in January 2012 after more than five years of duty free imports. The government's move was aimed at curbing the widespread practice of round-tripping, whereby companies seek to boost turnover by the frequent import and export of the same diamonds in order to get additional bank financing.

However, the calendar year 2012 saw polished diamond export declining to 37 per cent at $16 billion. The import of polished diamond too slumped to 72 per cent to 5.5 billion that year.

A DTC sightholder said, "Israel is the second biggest diamond cutting and polishing centre after India and it specializes in solitaires and big stones. India too is a big centre for big-sized stones. Our transaction cost is always higher than our counterparts in Israel because of 2 per cent import duty."

Vice-chairman, Gems and Jewellery Export Promotion Council (GJEPC), Pankaj Parekh said, "Import duty on cut and polished diamonds was a good move by the government. But, the genuine exporters are facing difficulties due to lower trading activity. However, we have asked the government to allow duty free import quotas for cut and polished diamonds to the tune of 15 per cent of the previous year's export."

"When Israel can take pro-active steps for the growth of its diamond industry, then we firmly believe that the Indian government too should consider our demand to allow 15 per cent duty free import of cut and polished diamonds," Parekh added.

Source : timesofindia.indiatimes.com