KOLKATA: High import duty on cut and polished diamonds and coloured gemstones is forcing Indian diamantaires to consider shifting their manufacturing units to countries where mines are located.
Colin Shah, vice-chairman of Gem & Jewellery Export Promotion Council (GJEPC), told ET, “The high import duty of 7.5% on both cut and polished diamonds and gemstones has become a major challenge to exporters. Import duty on both items has been hiked from 2.5% to 5% and then to 7.5% in a short span of eight months. This is compelling Indian exporters to look at other places to set up manufacturing base.”
Some of the world’s largest diamond mines are located in Russia, Canada, Botswana, Namibia and South Africa, while those of coloured gemstone are in Tanzania, Sri Lanka and Zambia.
According to GJEPC data, import of polished diamonds in September 2019 was down by about 25% from the year-ago month, when the duty was revised.
In the first seven months of current fiscal, import of cut and polished diamonds was 8% lower than that in the year-ago period. During the same period, export of cut and polished diamonds was lower by 18.31% than that in April-October of FY19. According to an executive, many of the countries where diamond mines are located have come up with beneficiation programmes under which diamantaires are encouraged to set up manufacturing units there.
Shah said most of the Indian diamantaires have their branch offices in key trading centres like Hong Kong and Antwerp.
The impact of the increase in import duty is also being felt in the US, one of the key markets for consignment export of diamond.
Source: economictimes.indiatimes.com