Will india be able to remain the stronghold of diamonds?
The GTRI report has given some suggestions to keep india as a stronghold of the diamond business. The first suggestion is that RBI can increase the credit period from 6 months to 12 months for exporters of cut and polished diamonds. Because buyers are demanding a longer credit period. During the Covid period, the credit period was increased from 9 to 15 months. Most exports are on consignment basis. Therefore, exporters are at risk of being declared defaulters by the bank if there is a delay in foreign exchange payment.
Special Notified Zones (SNZs) have been created in mumbai and surat in india where foreign companies can sell their raw diamonds. But there is a big problem. Foreign companies have to pay 40% tax on selling diamonds in India. This is very high. Because of this, foreign companies do not want to sell diamonds in India. They take the diamonds back to their country and then sell them in places like dubai where the tax is less. However, a new policy has been introduced in the 2024 budget under which corporate tax will be reduced on foreign companies selling diamonds directly in India.
On the other hand, the price of lab-made diamonds has fallen drastically. In the last year, the price has fallen from Rs 60,000 to Rs 20,000 per carat. This happened because too many diamonds are being made. When a jewel is sold, it should be clearly written whether it contains a lab-made diamond or not. A lot of diamonds can be made in india, so there is no need to import them from outside. Making good quality diamonds will create a good identity for India.
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