The Gem & Jewellery Export Promotion Council (GJEPC) has proposed a carat-based tax framework to position India as a global diamond trading hub, on the lines of Antwerp and Dubai. The recommendation was part of a detailed submission to the Union finance minister ahead of the upcoming Union Budget, outlining measures to revive growth in the gem and jewellery sector.

Despite India cutting and polishing nearly 90% of the world’s rough diamonds, the country has yet to emerge as a major trading centre. To address this, GJEPC suggested a more predictable and liberal tax regime for foreign mining companies operating in special notified zones. It also flagged concerns over the existing 4% safe harbour tax, stating that it discourages international trading activity, and urged the government to allow reputed global diamond brokers to operate in India to improve liquidity, transparency and global participation.

India’s gem and jewellery exports stood at $28.7 billion in 2024–25, making the sector a key contributor to foreign exchange earnings and employment. However, exporters are under pressure due to geopolitical uncertainties, US tariff measures and weak consumer demand in major markets. GJEPC called for targeted duty rationalisation and procedural reforms to maintain cost competitiveness.

The council highlighted issues arising from current import duty structures. Semi-processed diamonds are classified as cut and polished, attracting a 5% customs duty, while finished coloured gemstones also face similar levies. This, it said, puts Indian manufacturers at a disadvantage against competitors such as Thailand and China. GJEPC proposed reducing duties on cut and polished diamonds and gemstones to 2.5% and eliminating duties on rough gemstones.

Other recommendations included shifting to a value-based duty drawback system, extending benefits to platinum jewellery and gold articles, introducing a comprehensive tax refund scheme for foreign tourists, and continuing duty exemptions on imported lab-grown diamond seeds beyond March 2026.