The government is considering allowing duty-free import of polished diamonds.
At present, polished diamonds attract 5% customs duty, while the import of rough diamonds is allowed duty-free.
The government is also considering a proposal to lift the present requirement of allowing gold imports through select agencies. At present, over a dozen agencies are allowed to import gold into the country. Gold attracts a duty of Rs 250 per 10 gm.
Senior government officials told Business Standard that an inter-ministerial committee comprising the secretaries of the revenue department, commerce and planning commission was examining the issue.
"The idea is to make India a diamond trading hub and encourage the industry to move up the value chain. Since India has expertise in polishing fine diamonds, reducing import duty to zero will not adversely hit the polishing sector," an official said.
Officials said allowing duty free import of polished diamonds will help the domestic industry. While India has expertise in polishing small diamonds, the large ones (more caratage) are handled in Belgium or Dubai.
Dubai offers several incentives such as 100% foreign investment, 100% repatriation of profits and 50 years' income tax exemption to the sector, they said.
