India Slashes Import Tax on Polished Diamonds

RAPAPORT… The Indian government has reduced customs duty on polished diamonds to 5%, a move the industry has welcomed.

“The Indian gem and jewelry sector is one of the leading contributors to the national economy and the country is the undisputed leader in diamond processing,” said Colin Shah, chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC), in a statement Tuesday following the budget announcement. “[The] reduction in import duty on cut and polished diamonds to 5% will further help in strengthening the sector and retain its leadership position.”

The GJEPC had been urging the government to lower the duty from its previous rate of 7.5%, arguing that this would make India more competitive as a polished-trading center. The country already has the world’s largest diamond-manufacturing sector, but high taxes have made it expensive for companies to import polished.

However, the council had been calling for a deeper cut to 2.5% — a request that the government did not grant.

Duty on colored-gemstone imports has also fallen to 5% from 7.5%. Meanwhile, the rate for “sawn diamonds” — rough that has been cut but not yet faceted — has dropped to zero from 7.5%. Around 10% of Indian’s rough-diamond imports arrive in that form, Shah told Rapaport News.

Indian Finance Minister Nirmala Sitharaman announced the changes Tuesday in her Union Budget speech, in which she outlined the government’s fiscal plans for the 2022-23 financial year.

Image: A polished round brilliant diamond in a parcel. (Shutterstock)