Diamond Export Boost: Govt Launches Imprest Scheme

New Delhi, Jan 21 (PTI) The government on Tuesday introduced the Diamond Imprest Authorisation scheme, which allows duty-free import of cut and polished diamonds up to a specified limit, to boost exports and enhance value addition.

The diamond industry is witnessing a steep decline in exports and job losses for the workers, the commerce ministry said.

This scheme is expected to combat this trend and will rejuvenate the industry. It mandates export obligation with a value addition of 10 per cent.

"Department of Commerce has introduced the Diamond Imprest Authorization scheme on January 21, aiming to enhance the global competitiveness of India's diamond sector," the statement said.

The commerce ministry also said that diamond exporters holding two-star export house status and above and having USD 15 million exports per year, are eligible for availing the benefit under this scheme.

"This scheme allows the duty-free import of natural cut and polished diamonds, of less than 25 carats (25 Cents)," it said, adding that it will be implemented from April 1.

The ministry added the scheme is designed to provide a level playing field for Indian diamond exporters, particularly from the MSME (micro, small and medium enterprises) sector.

"It aims to prevent the potential flight of investments by Indian diamantaires to diamond-mining destinations," it said.

Additionally, the scheme is expected to generate more employment opportunities, particularly for diamond assorters and in the processing of semi-finished diamonds in factories.

By facilitating Indian exporters, it seeks to protect the domestic diamond processing industry and sustain the associated employment, it said.

"This scheme also expected to create employment opportunities for skilled craftsmen in the diamond industry and is also expected to increase the export of cut and polished diamond from India," the ministry added.

The scheme is made in response to "Beneficiation" policies undertaken in a number of natural diamond mining countries like Botswana, Namibia and Angola where diamond manufacturers are obliged to open cut and polishing facilities for a minimum percentage of value addition.

"This scheme is aimed towards retaining India's position as a global leader in the entire value chain of the diamond industry," it said.

According to the think tank GTRI, a 24.5 per cent drop in rough diamond imports from USD 18.5 billion in 2021-22 to USD 14 billion in 2023-024 shows weaker global markets and fewer processing orders.

Exports of cut and polished diamonds fell by a higher margin of 34.6 per cent, from USD 24.4 billion in FY 2022 to USD 13.1 billion in 2023-24.

The demand for polished diamonds has dropped in key markets like the US, China, and Europe due to economic uncertainty, inflation, and geopolitical tensions, leading to reduced consumer spending on luxury goods, including diamonds.

The Russia-Ukraine conflict has also disrupted the global diamond supply chain, with sanctions on Russia, a major rough diamond producer, further complicating trade and slowing down the global diamond trade.

Shifting consumer preferences toward lab-grown diamonds, which are more affordable, ethical, and sustainable, are also impacting the demand for natural diamonds.

Belgium's share of India's rough diamond imports dropped from 37.9 per cent in FY 2020 to 17.6 per cent in FY 2024. Dubai's share increased from 36.3 per cent in FY 2020 to 60.8 per cent in FY 2024 and further to 64.5 per cent in April-June 2024.

The Indian diamond industry consists of over 7,000 companies involved in various activities such as cutting, polishing, and exporting diamonds.

Most of these companies are concentrated in Surat, Gujarat, and Mumbai, Maharashtra. The majority of these firms are SMEs (small and medium-sized enterprises), with many family-owned businesses dominating the sector.

The diamond industry in India provides direct employment to about 1.3 million workers. This includes those involved in the cutting, polishing, trading, and exporting of diamonds.

Surat alone accounts for nearly 8,00,000 workers, making it the world's largest hub for diamond cutting and polishing.

The industry also supports millions of indirect jobs in related sectors such as logistics, transport, retail, and diamond tool manufacturing.