In News:

The Union Government, under the Foreign Trade Policy 2023, has introduced the Diamond Imprest Authorization (DIA) Scheme to enhance India’s competitiveness in the global diamond trade, promote exports, and protect employment, especially in the MSME sector.

Key Highlights:

Objectives:

• Boost value addition and export growth in the diamond sector.
• Support MSME exporters to compete globally.
• Retain India’s position as a global hub for diamond processing and exports.
• Mitigate recent challenges like export decline, job losses, and global demand shifts.

Key Features of the Scheme:

Feature                                                              Details

Type of Diamonds Allowed                             Natural cut and polished diamonds less than ¼ carat (25 cents)

Eligibility                                                          Exporters with Two Star Export House status and minimum $15 million annual exports

Export Obligation                                            10% value addition on imported diamonds

Duty Exemptions                                             Exempts Basic Customs Duty, Anti-dumping Duty, Countervailing Duty, etc.

Effective Date                                                  April 1, 2025

Exclusion                                                         Lab-Grown Diamonds (LGDs) not covered

Monitoring Agency                                         Gems and Jewellery Export Promotion Council (GJEPC)

Why the Scheme Was Introduced:

Challenges in the Diamond Sector:

• Global: Falling demand in US, Europe, China; rise in lab-grown diamonds.
• Domestic: High unsold inventory, rising operational costs, reduced credit flow, and high corporate tax.
• Employment Impact: Job losses in the diamond cutting and polishing segment.

International Context:

• Inspired by beneficiation policies in diamond-producing countries like Botswana and Namibia, which mandate local value addition.

Significance:

• Enhances India’s role in the global diamond value chain.
• Provides ease of doing business through duty relief.
• Promotes employment generation, especially for diamond assorters and processors.
• Facilitates inclusive growth by supporting MSMEs in a traditionally export-driven industry.

Way Forward:

• Regulate Lab-Grown Diamonds to prevent market distortion.
• Extend export credit period and consider tax exemptions for foreign diamond sellers.
• Ensure technology upgradation and skill training to sustain global leadership.