The diamond industry in India
wants the Government to eliminate the import duty
on polished diamonds, which at present attract
5% customs duty (imports of rough diamonds are
allowed duty-free). Allowing duty free import
of polished diamonds will help the domestic industry,
since India currently only has expertise in polishing
small diamonds while the large ones (more caratage)
are handled in Belgium or Dubai. Other destinations
such as Dubai are luring investors with several
incentives such as 100% foreign investment, 100%
repatriation of profits and 50 years’ income
tax exemption to the sector. The idea is to make
India a diamond trading hub and encourage the
industry to move up the value chain. Since India
has expertise in polishing fine diamonds, reducing
import duty to zero will not adversely hit the
polishing sector
The bullion industry
on the other hand is mooting a proposal to lift
the present requirement of allowing gold imports
through select agencies. At present, over a dozen
agencies are allowed to import gold into the country.
Gold attracts a duty of Rs 250 (US $ 5.5) per
10 grams.
An inter-ministerial committee comprising the
secretaries of the revenue department, commerce
and planning commission is said to be examining
the issue.
Our Say |
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| India
is the world's largest gold importer
and diamond cutting and polishing
centre. It accounts for about 60%
of the global diamond trade in value
terms, 85% in volume terms and 92%
in pieces. Out of every 12 diamonds
11 are said to be cut and polished
in India. The proposed move would
lure several foreign companies and
traders to set up shop in India for
export to other countries. This would
lead to an additional employment of
seven million people, especially in
rural India where most of the country's
skilled workforce is based.
The
Gem and Jewellery Export Promotion
Council, an apex trade body, has also
made an additional recommendation
that the import duty on plain gold
jewellery below 18 carat should be
cut to 5% from 20%. This would prompt
companies in countries such as Italy
and Turkey to set up manufacturing
base in India, create employment and
bring in foreign investment and know-how.
This would also help India get export
orders for making low-carat gold jewellery,
an area that the country does not
have an expertise in.
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