The Commerce Department has supported the demand made by gems & jewellery exporters for restoration of the diamond imprest licence scheme – that allows import duty exemption on cut and polished diamonds up to a given limit and subject to re-export and other conditions – but the Department of Revenue is yet to come on board, according to sources.
“Exporters of gems & jewellery have approached the Directorate General of Foreign Trade for restoration of the diamond imprest licence scheme in the latest Foreign Trade Policy. While the DGFT has taken up the matter with the DoR, the latter has not yet agreed to give its consent,” a source tracking the matter told businesline.
Diamond imprest licence scheme, which used to be part of the Foreign Trade Policy in the past, was withdrawn after the import duty on cut and polished diamonds was abolished in 2009, according to the Gems & Jewellery Export Promotion Council (GJEPC).
However, when import duties were re-introduced on cut and polished diamonds in 2012, the scheme was not re-introduced.
“The industry has been demanding that diamond exporters above a certain export turnover threshold should be allowed to import, through the diamond imprest licence scheme, at least 5 per cent of the average export turnover of preceding three years. The Commerce Department is supporting the demand as it could push exports of gems & jewellery by making the industry more competitive,” the source said.
Fillip to exporters
In their pre-Budget recommendation, GJEPC had noted that the scheme could give diamond exporters the leverage to cope up with the beneficiation policies undertaken by major mining countries in Africa.
But the DoR is yet to be convinced and has not given its consent. “The DoR has a number of concerns around restoring the scheme, such as revenue considerations and worries about the possibilities of round-tripping. However, the Commerce Department will continue to be in dialogue and keep pressing for it,” the source said.
If the DoR comes on board, the provision can be incorporated into FTP 2023 through a notification, he added.
India’s gems & jewellery exports declined 2.92 per cent in FY23 to $ $37.9 billion compared to $3.09 billion in the previous fiscal. The fall in exports of gems & jewellery was a sharper 27.39 per cent in March 2023 to $2.7 billion compared to $3.7 billion in March 2022.