The Ministry of Commerce has recently launched the Diamond Impress Authorization (DIA) Scheme, aimed at enhancing the global competitiveness of India’s diamond industry. It has been introduced under the Foreign Trade Policy 2023. It aims to provide a streamlined mechanism for duty-free import of natural cut and polished diamonds.
Key Features of Diamond Impress Authorization (DIA) Scheme
- Duty-free import: Under this scheme, duty-free import of natural cut and polished diamonds less than 1/4 carat (25 cents) is allowed.
- Export Obligation: 10% value addition on exports is mandatory.
- Eligibility: Diamond exporters who have Two Star Export House status and exports of US$ 15 million per annum are eligible.
- Exception: The scheme does not apply to Lab-Grown Diamonds (LGDs).
- Taxes exempted: Exemption from basic custom duty, additional custom duty, education cess, anti-dumping duty, countervailing duty and other taxes.
Impact on Indian Diamond Industry
Improving exports and employment opportunities
- The diamond industry has faced challenges such as decline in exports and job losses.
- The DIA scheme will help overcome these problems and increase employment opportunities by promoting local processing.
- The scheme is designed to revive the diamond sector, including support to large exporters along with small and medium enterprises (SMEs).
Challenges of the Diamond Industry
Global Challenges
- Decline in demand: Significant decline in demand for polished diamonds in the US, China and Europe.
- Change in consumer preferences: Increasing trend towards lab-grown diamonds.
Internal Challenges
- Excessive Stocks: Large unsold stock of polished diamonds.
- Rising Operating Costs: Continuous increase in cost of production.
- Decreasing Profits: Decreasing margins due to competition in the global market.
- High Corporate Taxes: High tax system in India poses a challenge to the industry.
- Decreasing Bank Credit: Decreasing funding by banks.