India Hikes Taxes on Diamond Imports

RAPAPORT... The Indian government has increased import taxes on polisheddiamonds to 5%, prompting criticism from the Gem & Jewellery ExportPromotion Council (GJEPC). The levy applies to cut and polished diamonds, both natural andlaboratory grown, and to colored gemstones, Finance Minister Arun Jaitley saidin a budget speech Thursday. The new rate - up from 2.5% - is one of severalchanges to customs-duty rates aimed at protecting local industry. Jaitley alsoraised import taxes on imitation jewelry to 20% from 15%. However, the decision damages the nation's ability tocompete with other diamond-trading hubs such as Belgium, Dubai and Israel,GJEPC chairman Pramod Agarwal said in a statement the same day. "We are disappointed with the increase in customs duty...as itwas not included as part of the industry's recommendations to the government,"he noted. "This move hampers India's chances of becoming an international diamond-tradinghub." Even so, Agarwal welcomed the government's efforts todevelop India's gold industry, and said the GJEPC would seek a reduction inimport duty on gold, silver and other precious metals. Meanwhile, the decisionto lower corporate tax for companies with annual revenue above $38.9 million(INR 2.5 billion) will benefit the gem and jewelry trade, he noted.