Custom Duty on diamonds and gems is Doubled

The government has doubled the import duty on diamonds made in cut and finish diamonds, gem stones . This has resulted in a great setback to India's hopes of becoming the world's largest diamond trading center. Announcing the Union Budget 2018-19, the Finance Minister on Thursday announced the increase in customs duty on all types of diamonds from 5 to 2.5 per cent, including colorful gems. Similarly, the customs duty on fake jewels has been increased from 15 per cent to 20 per cent. Apart from this, 10% social welfare surcharge has been imposed on import duty and education cess has been withdrawn. Thus, net surcharge on import duty will be 7% of customs duty.

With the increase in customs duty, diamond jewelery exporters will be shocked by the cost of production and global competitiveness. For Indian jewelery, it is difficult to compete with major jewelery producing countries including China. Apart from this, the increase in customs will weaken the chances of becoming India's leading business center. The Union Commerce Ministry has planned to make India the headquarters of diamond business. The Gemstone Jewelry Export Promotion Chairman Pramod Agarwal Council (GJEPC) by Commerce under the Ministry said, "will have an impact on India's exports rise in customs, which has remained stable over the past few years. Generally, foreign importers return 10 percent of the imported goods due to various reasons, which we now have to pay 5 percent. "
 
India imports $ 1.75 billion cut and decorated diamonds during April to December, 2017, which is 12% less than the import of this period last year from 1.99 billion dollars. Pravin Shankar Pandya, Managing Director, Rewashankar James Limited said, "India is the only country in the world where import duty is levied on cut and finished diamonds. The major centers of diamond business such as Belgium, Hong Kong, have finished the import duty on precious gems. That's why the business of India's cut and finished diamonds will be badly affected by the duty. "
 
There is a world-class business center like Mumbai Diamond Bourse (BDB) in Mumbai. Through this, the government has planned to make India a global business center of cut and finished diamonds. The government has invited world veterans miners like De Beers, Rio Tinto, Alrosa to start their own business centers in India. The Government has argued that having world-class business facilities in BDB will help small and medium diamond makers to buy good quality diamonds abroad without buying it. India currently carries around 90% of the diamonds that are extensively researched around the world.