De Beers to service Indian clients through office in Dubai, Antwerp

Special Notified Zone insufficient to encourage global diamond miner to open trading office in India

De Beers, the global diamond mining company, says it has no plan to open a trading office in India.

“The auction sales customers in India are serviced out of either Dubai or Antwerp,” said a spokesperson, to a Business Standard query.

The Gems and Jewellery Export Promotion Council (GJEPC) had been pressing the central government to declare a large office at the Bharat Diamond Bourse in the Bandra Kurla Complex of this city as a ‘Special Notified Zone’, to enable global miners such as De Beers to bring rough diamonds tax-free for auctioning in India.

Import and export of roughs into such a zone is duty-free.

Commerce and industry ministry Nirmala Sitharaman had a discussion in October with the revenue secretary on this. It appears the declaration of such a notified zone at the Bourse is under consideration.

Currently, small diamond processors travel to Dubai, Belgium and Antwerp for inspection of rough diamond lots and again for participating in auctions.

Goods sold in a special notified zone come in the form of consignments. In transporting unsold quantities back to Dubai, Antwerp or London, the value of goods is added to the turnover, on which income tax is levied. Therefore, global rough diamond miners have been apprehensive on opening offices in India.

“Global miners can take back the unsold quantity without any levy in case a Special Notified Zone is declared by the government,” said Shah.

  Major global trading centres such as Dubai, Singapore and Belgium have already extended such a facility. De Beers contributes around 25 per cent of India’s rough diamond supply. Well over 90 per cent of all rough diamonds mined in the world are processed in this country. Rough diamond import into India was estimated at $11,878 million in April–November, the first seven months of this financial year, compared with $16,716 mn in the corresponding period last year, 8.5 per cent higher.

At the recent ‘Make in India’ meeting of business people and policy makers with Prime Minister Narendra Modi, GJEPC executive director Sabyasachi Ray urged the government to introduce a conducive taxation regime, at par with other global gem and jewellery hubs such as Belgium, Israel, UAE, Thailand and China.

The industry has urged the government to introduce a Benign Assessment Procedure for the diamond industry and to reduce the tax rate from the existing six per cent to 2.5 per cent, in addition to a reduction in import duty on cut and polished coloured gemstones from 2.5 per cent to nil.