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India to Weigh Recommendations For Becoming Rough Trading Hub
Feb 13, 2013 4:34 AM
By Dilipp S Nag
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RAPAPORT... India unveiled recommendations designed to make the country an international trading hub for rough diamonds. The proposal addresses special import and trading zones, duty-free rules and creating a beneficiation policy, among other issues.
“The conscience of the Indian diamond sector and the commitment of Indian government for clean and responsible diamond trading is really high,” said Anand Sharma, India’s Union Minister of Commerce, Industry and Textiles. “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.”
Sharma released the report on Tuesday, acknowledging that India is committed to continuing to be a responsible and active member of the Kimberley Process Certification Scheme by implementing all of its regulations. “Very few countries [have] such an impeccable record and the world would not have been able to reach less than 1 percent trading of conflict diamonds if India would not have vouched for the same so steadfastly,” he noted.
The government convened the task group that made the recommendations on diamonds, which represent a major factor of merchandise exports, under the chairmanship of Anup Pujari, the director general of foreign trade, in light of the slump in diamond exports from India through the past few quarters.
The group conducted an extensive review of issues related to trade facilitation, taxation, fiscal measures and promotional matters pertaining to the Indian diamond industry in line with such practices prevalent at other global diamond centers.
Some of the recommendations in the report include setting up a special notified zone for the import and trading of rough diamonds, permission to import cut and polished diamonds duty-free up to the extent of 15 percent of the average of a company's previous three years’ exports, and reducing the rate of computation of profit under Benign Assessment Procedure (BAP) from 6 percent to 2.5 percent.
The task group also suggested defining a beneficiation policy for diamonds mined in India, setting up a $37 million (INR 2 billion) ''technological upgradation fund'' scheme (TUFS), and extending the 2 percent interest subvention scheme to the industry, as most diamond manufacturing companies do not fall under the current threshold, and establishing an industry fund for generic diamond promotion campaigns.
The report is of great importance to the government as India is the world's leading hub for manufacturing diamonds, employing a large number of people from underprivileged sectors of the society.
Sharma committed to take the recommendations to the relevant departments in a timely manner so as to decrease the transaction cost of exports, simplify compliance by the sector with taxation authorities and benefit the trade.
He noted that the government had already issued the orders necessary to implement certain pertinent demands from the industry, such as granting bonded warehouse facilities for diamonds, which has become necessary due to the imposition of a 2 percent import duty on polished diamonds.
The industry anticipates that the recommendations will be implemented within a specified time period to be decided by the government.
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Tags:
Anand Sharma, Conflict Diamonds, diamonds, Dilipp S Nag, Duty, Hub, India, Kimberley Process Certification System, KP, KPCS, polished, rough, trading, TUFS
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