India to Raise Import Duty on Polished Diamonds to 5%

India's government intends to raise the import duty on cut and polished diamonds from the existing 2 percent to 5 percent in an effort to protect the interests of its small-sized diamond manufacturers, reports Business Standard.

Notification of the tax increase is expected this next week.

Data compiled by the Gems & Jewellery Export Promotion Council (GJEPC) shows that India's imports of cut and polished diamonds almost doubled in the first six months of the current financial year, leading to a loss of processing opportunities and profits for domestic small-scale diamond manufacturers and, ultimately, the closure of thousands of their manufacturing units across the country. The industry has also consequently seen its skilled labor flee to other competing industries, such as textiles and agriculture, states the news source.

The government is therefore instituting protection for its small-scale manufacturers in the form of an increased import duty on cut and polished diamonds, which is aimed at discouraging trading activities and providing them "a great relief," according to Vipul Shah, GJEPC Chairman.

The increase in import duty is unlikely to affect the country's jewelry exporters, notes the news source, adding that duty paid by them is taken back from the government through an export incentive scheme called the Duty Entitlement Passbook Scheme.

http://www.jewellerynewsasia.com/en/India/9077/India-to-raise-import-duty-on-polished-diamonds-to-5-says-report.html