Task group suggests exclusive trading hub for diamonds

A task group set up to suggest ways of preserving India's position as the primary trading hub for rough diamonds has suggested the setting up of a special notified zone for import and trading in diamond roughs and concessions both in import duty and profit computation, among others.

The task force, headed by the director general of foreign trade Anup K Pujari, also recommended that traders be allowed to import cut and polished diamonds duty free up to the extent of 15 per cent of their average exports of the of previous 3 years.

Besides, it recommended a reduction in the rate of computation of profit under a benign assessment procedure (BAP) to 2.5 per cent against 6 per cent calculated at present.

The task force, comprising members from both the government and industry, undertook an extensive review of the issues related to trade facilitation, taxation, fiscal measures and promotional matters related to the Indian diamond industry in line with global practices.

The report is of great significance as India currently enjoys the status of the top hub for manufacturing of diamonds in the world. Diamond exports also is a major contributor to merchandise exports from the country.

The diamond industry employs a large number of people from the underprivileged sections of the society in India.

Some of the major recommendations of the task group are:

• Reducing the rate of computation of profit under a benign assessment procedure (BAP) to 2.5 per cent from 6 per cent;
• Duty-free import quota of 15 per cent against re-import of cut and polished diamonds;
• Setting up of a Special Notified Zone for import and trading of rough diamonds;
• Establishment of a $3-5 billion fund for banks to refinance their dollar loans to the industry;
• Extending the 2 per cent interest subvention scheme to the industry;
• 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 Rs200 crore Technology Upgradation Fund Scheme (TUFS);
• Establishment of a fund in partnership with the industry for generic promotion of diamonds and promotion of diamonds; and
• Other procedural related suggestions to reduce transaction costs of exports.

Commenting on the report, minister of commerce, industry and textiles Anand Sharma said his ministry is committed to take up the recommendations with the concerned government departments in a time bound manner so as to decrease the transaction cost of exports, simplify compliance of trade with taxation authorities and benefit the trade with the natural resources emanating from India.

He said the government and the Indian diamond sector are committed to clean and responsible diamond trading.

''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,'' he added.

''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 per cent trading of conflict diamonds, if India would not have vouched for the same so steadfastly,'' the minister said.

Sharma also noted that the commerce ministry has already issued necessary orders to implement certain pertinent demands of the industry, like granting of bonded warehouse facility for diamonds, which had been necessitated due to the imposition of 2 per cent import duty on cut and polished diamonds.