Hike in customs duty on cut and polished diamonds and processed colour gemstones will increase the cost of business and impact exports and trade, the Gem and Jewellery Export Promotion Council (GJEPC) said Friday.
The government Wednesday had raised the import duty on cut and polished diamonds and processed colour gemstones to 7.5 per cent from 5 per cent, to narrow the current account deficit (CAD).
GJEPC chairman Pramod Kumar Agrawal said India, a global leader in diamond processing, is not just a hub for processing roughs, but also caters to varied forms of reprocessing of diamonds and diamond jewellery.
He explained that a substantial size of cut and polished diamonds sold world over, in the form of either loose or set in jewellery, are imported for re-setting in new design as desired by the customers.
"There are broken, damaged sold goods and semi processed stones that form considerable part of import of cut and polished diamonds and this move will limit the business of cutting and polishing and hence impacting large part of the employment in the sector," he said.
Other global trading centres such as New York, Dubai and Israel will be at an advantage and the import duty hike could encourage malpractices in India, he added.
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Processed coloured gemstones too form significant component for jewellery and hike in the tariff will hurt the business, according to Agrawal.
GJEPC, he said, would represent the concerns to the government to find a mechanism that will minimise impact on the exports.
India is a global leader in cutting and polishing of diamonds exported USD 23 billion worth of cut and polished diamonds and USD 9.7 billion worth of plain and studded jewellery in 2017-18.