Diamond industry calls for notified zone in Surat too

Even as discussions are on for a special notified zone with tax benefits in Mumbai, the diamond industry is seeking a similar zone in Surat too. 

The government is under discussions for setting up a special zone with tax benefits for diamond import and trading in Mumbai, to develop the country’s financial capital as a rival to Antwerp and Dubai, which are currently trading hubs for the precious stone.

A trading hub in India will mean that the role of middlemen is limited and the concerns over invoicing, that we often hear from tax authorities, are reduced,” said Parag Parekh, vice-chairman of GJEPC, which is pushing the plan. Parekh said the Bharat Diamond Bourse in Mumbai’s Bandra Kurla Complex has been suggested as a possible option.

However, many traders feel the move to set up notified zone in Mumbai could deter diamond traders’ plans to shifting their base to Surat in the wake of a diamond bourse in the Gujarat city from Mumbai. This has also led to Gems and Jewellery Export Promotion Council (GJEPC) proposing a similar zone in Surat also.

“We have made a proposal to the Ministry of Commerce a similar notified zone for Surat so that the upcoming bourse there also benefits,” said Vipul Shah, chairman of GJEPC. A new diamond bourse is being planned in Surat on the lines of the existing Bharat Diamond Bourse of Mumbai for which the state government has also committed to extend support.

The Ministry of Commerce has reportedly held initial discussions over setting up of a notified zone with tax benefits for diamond import and trading in Mumbai which will look to contain role of middlemen. The zone will offer several tax benefits especially in trading of rough and polished diamonds including duty-free re-import quota for polished diamonds. The Bharat Diamond Bourse in Mumbai is also being contemplated as one of the location options for the zone.

Surat-based diamantaires are worried the move could slow down the process for a diamond bourse in the Gujarat city. “Registrations have been pouring in for the bourse which is likely to come up within three years. However, while the notified zone will overall benefit the industry, it may defer shift of diamond traders from Mumbai to Surat on the back of a new bourse in Gujarat,” said a member of the Surat Diamond Association (SDA), on condition of anonymity.

However, according to Chandrakant Sanghvi, past chairman of GJEPC, a similar notified zone in Surat may only be possible closer to the completion of the new bourse in the Gujarat city.

Courtesy: BS