India Reduces Diamond Industry's Tax Burden

RAPAPORT... The Indian government has lowered the rate of goods and services tax(GST) for certain diamond work in a move that will help buoy the struggling sector, the nation's Gem & Jewellery Export Promotion Council (GJEPC) said. GST on diamond "job work" - manufacturing or otheractivities that a company outsources to a third party, such as diamond cuttingor jewelry making - will drop to 1.5% from 5%. Finance Minister Nirmala Sitharaman and the GST council implemented the policy changes at ameeting in Goa, India, on September 20. "The measures announced yesterday will enhance [the] ease ofdoing business, boost exports, and make India more competitive with respect toneighboring countries, and attractive as an investment destination," GJEPC chairman Pramod Agrawal said lastweek. The reduction will lessen the working-capital burden onIndian diamantaires, who have been struggling with tightening credit from banksand weak retail demand for polished stones, explained Agrawal. It will also help entice globalcompanies to set up manufacturing bases in India, he noted. The GJEPC has been petitioning the government to reduce taxeson diamonds. In July, the government revised the rules on goods shipped out ofthe country for trade shows or consignment, declaring that those items don'tconstitute supply, and are therefore exempt from GST if reimported within sixmonths. "The [latest] stimulus will bring cheer to the trade constituents andindustry on the eve of the festival season," Agrawal added. "It is the rightsignal to send to the world, especially on the eve of the prime minister'svisit to the US, which is the biggest export market for the gem and jewelryindustry." Image: Diamond manufacturing. (Shutterstock)