India Passes 15-Year Tax Exemption Law for Overseas Rough Sellers

The Indian government has passed a bill granting a 15-year tax holiday for foreign companies selling rough diamonds in special notified zones (SNZs).

The exemption, which is due to take effect on October 1 and run through March 31, 2041, would apply to a range of overseas-based rough sellers, including miners, brokers and aggregators, the Gem and Jewellery Export Promotion Council (GJEPC) said last week. It would also apply to operators of tenders and auctions, as well as sightholders – the term for De Beers’ contract customers, which often resell their rough.

“This is a defining moment for India’s diamond industry,” said GJEPC chairman Kirit Bhansali. “For years, the one thing holding us back from becoming a global rough-diamond trading hub was not capability or capacity – it was certainty. A 15-year statutory exemption removes that doubt entirely. We cut and polish 14 out of every 15 diamonds in the world. With this law, the entire diamond value chain – from rough trading to manufacturing, polishing and jewelry exports – can now be anchored in India.”

Under the new law, proceeds from rough sales will not count toward the total income for a tax year used to calculate a company’s tax obligation, the bill explained. As a condition, the company must carry out the sale in one of the SNZs, such as those inside Mumbai’s Bharat Diamond Bourse (BDB) and the Surat Diamond Bourse (SDB), and must submit certain information when asked.

Following the enactment, a senior government delegation from Namibia visited India to explore direct diamond trade.

“This will give Indian manufacturers – particularly small and medium enterprises (MSMEs) — direct access to high-quality rough without the cost and complexity of sourcing overseas,” said Anoop Mehta, a convenor on the Diamond Panel at GJEPC. “We are very positive that, with this new policy, a greater share of Namibia’s diamond trade can come directly to India.”

India is currently exploring a memorandum of understanding (MoU) with Namibia, it said.

“This bill marks the beginning of a new chapter,” Bhansali added. “India has always been the world’s diamond workshop. We are now building the foundations to become its diamond marketplace. The interest from producer nations that we are already seeing tells us that the world is ready for this shift.”

Image: Rough diamonds. (Shutterstock)