India to Raise Import Tax on Diamonds – Report

India is planning to raise import duty on cut and polished diamonds to five percent from the present two percent level with the aim of protecting the sub-continent's smaller diamond manufacturers.

The increase is due to be announced later this week, the Business Standard newspaper reported.

The Gems & Jewellery Export Promotion Council (GJEPC) says imports of cut and polished diamonds almost doubled in the first six months of the current fiscal year (April-October), which has battered domestic manufacturers.

The increase in cut and polished diamonds is a threat to the domestic manufacturing industry, mostly to small-scale manufacturers, commented GJEPC Chairman Vipul Shah.

And with higher exports and less manufacturing, the domestic industry could see the firing of staff who would be lost to competing industries, including textiles and agriculture.

"Around 1,000 units in Surat alone have been shut down due to the lack of profit,” said Govind Dholakia, a Surat-based diamond manufacturer and exporter. “More are on the verge of closure as the import of cut and polished diamonds has reduced manufacturing opportunities for domestic processors."