While welcoming the Indian government's recent Increase of the import duty on jewelry from 15% to 20% as a way to strengthen the jewelry manufacturing sector, Chairman of the Gem & Jewellery Export Promotion Council (GJEPC) Pramod Kumar Agrawal said the hike on cut and polished diamonds and processed colored gemstones would negatively impact exports and trade of cut and polished diamonds.
The Indian government recently increased the customs duty on cut and polished diamonds, lab-grown diamonds, cut and polished colored gemstones as well as s semi-processed, half cut and broken diamonds to 7.5 percent from 5 percent, and increased the import duty on jewelry articles from 15% to 20% in a move to narrow the current account deficit (CAD). Responding to this move, the GJEPC Chairman said: “This move would not only help the sector strengthen jewelry manufacturing in India but also give a boost to jewelry exports from India, a step towards establishing Brand India jewelry.” However, he added, "The import duty increase on cut and polished diamonds and processed colored gemstones ... would increase the cost of business for the sector and impact exports and trade."
He explained that India is not just a hub for processing rough diamonds, but also reprocesses substantial numbers of cut and polished diamonds. These products, which are sold around the world as loose stones or set in jewelry, are first imported for resetting in new designs or products. Broken or damaged goods and semi-processed stones also form a considerable share of import of cut and polished diamonds. "This [rate increase] would lead to practical inconvenience and limit the business of cutting and polishing, impacting a large part of the employment in the sector," he said. "Further," he notes, “Other global trading centres such as New York, Dubai, Israel would be at an advantage, and the import duty hike could encourage malpractices in India.” He went on to remark: “Processed colored gemstones also form a significant component for jewelry, and a hike in the tariff will hurt the business. He said that the GJEPC would work with the government to find a mechanism that would help minimize the impact on exports.