India Poised to be the Leading International Trading Hub for Rough Diamonds
Task Group report to make recommendations to help India retain its primacy as a trading hub
Shri Anand Sharma, Union Minister of Commerce, Industry and Textiles accepted and unveiled a Task Group report to make India an International Trading hub for rough diamonds. The task group on diamonds was constituted by the Minister of Commerce, Industries and Textiles under the Chairmanship of Director General of Foreign Trade, Dr. Anup K. Pujari keeping in view the slump in exports of diamonds from India through the last few quarters.
Some of the recommendations in report include setting up of a Special Notified Zone for import and trading of rough diamonds, permission to import cut and polished diamonds duty free up to the extent of 15% of the average of previous 3 years™ exports and reducing the rate of computation of profit under Benign Assessment Procedure (BAP) from 6% to 2.5%, amongst others.
Commenting on the report, Shri Sharma mentioned that The conscience of the Indian diamond sector and the commitment of Indian government for clean and responsible diamond trading is really high. Some mischievous and malicious elements of late have been trying to malign the perception of the Indian Diamond Sector, which the Indian Government will not allow.
India is the largest diamond cutting and polishing center in the world, committed to continuing as a responsible and active member of the Kimberley Process Certification System by implementing all its regulations. Very few countries are having such an impeccable record and the world would not have been able to reach less than 1% trading of conflict diamonds, if India would not have vouched for the same so steadfastly.
The task group which comprised of members, both from the Government and Industry, did an extensive review of the issues related to the trade facilitation, taxation, fiscal measures and promotional matters related to the Indian diamond industry in line with such practices prevalent at other global diamond centres.
This report is of great importance to the Government as India currently enjoys the status of the foremost hub for manufacturing of diamonds in the world. Diamond Exports is also a major contributor to the merchandise exports of the country. It also employs a large number of people from the underprivileged section of the society in India.
Shri Sharma appreciated the suggestions of the Task Group to help India retain its primacy as a trading hub, committed to take up the recommendations, which have been put forward with the concerned departments of the Govt. in a time bound manner so as to decrease the transaction cost of exports, simplify the compliance of the trade with taxation authorities and benefit the trade with the natural resources that is emanating out of India. The Minister also noted that the Ministry had already issued the necessary orders to implement certain pertinent demands of the industry immediately after the same have been demanded by the industry, like granting of bonded warehouse facility for diamonds which had been necessitated due to the imposition of 2% import duty on cut & polished diamonds.
Some of the salient recommendations of the task group are:
– Reducing the rate of computation of profit under Benign Assessment Procedure (BAP) from 6% to 2.5%.
– 15% duty free re-import quota for import of cut and polished diamonds
– Setting up of a Special Notified Zone for import and trading of rough diamonds
– Establishment of a USD 3-5 billion fund for banks to refinance their dollar loans to the industry
– Extending the 2% interest subvention scheme to the industry, as most diamond manufacturing companies do not fall under the current scheme
– Continuation of the system of Honorary Valuation Panels for the diamond sector
– Defining a beneficiation policy for diamonds mined in India
– Setting up of a Rs 200 crore Technological Upgradation Fund Scheme (TUFS)
– Establishment of a fund in partnership with the industry for generic promotion of diamonds and promotion of diamonds
– Other procedural related suggestions to reduce transaction costs of exports
The industry commended the proactive role of the government in trying to solve the industry specific issues and anticipates that the recommendations will be implemented within the specified time period as to be decided by the government.