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Govt designates centre at Bharat Diamond Bourse as special notified zone

The Special Notified zone will have facility for viewing, auction and sale of rough diamonds at the Bharat Diamond Bourse in Mumbai. This would also include import, trading and re-export of rough diamonds.

The government has notified the precious cargo customs clearance centre, a part of Bhrat Diamond Bourse BDB) at Bandra Kurla Complex, Mumbai as “special notified zone” (SNZ) for the trading of rough diamonds. This would include import, trading and re-export of rough diamonds. Besides, a regulatory framework has been prepared by the ministry of finance in consultation with the Directorate General of Foreign Trade (DGFT), the Reserve Bank of India (RBI) and the industry.

According to the framework, the notified zone will have facility for viewing, auction and sale of rough diamonds, and shall include all necessary, commercial, security and customs related facility. As per the framework, Bharat Diamond Bourse proposes to outsource the handling of rough diamonds imported for auctions/sales, to a special purpose vehicle, namely India Diamond Trading Centre, jointly constituted by Gems and Jewellery Export Promotion Council (GJEPC) and Bharat Diamond Bourse.

Besides, the list of companies will have to get permission from the Reserve Bank of India to avail facility of this special notified zone and the import of rough diamonds will be permitted through air cargo route only and not by hand carriage or express courier mode. The rough diamonds to be placed for viewing, auctions or sale will be accompanied by a declaration of value through an invoice, packing list, documents of insurance and Kimberley Process Certificate. While traders will get accessibility to the special notified zone, the GJEPC will formulate the eligibility criteria, photo identification card.

The proposal to notify Bharat Bourse as a special notified zone for trading of rough diamonds follows the decision of the government to permit trading of rough diamonds by leading diamond-mining companies of the world in India. In 2014, the Reserve Bank had relaxed the norms for the trading of rough diamonds by allowing importers of rough diamond to send advance remittances to any company apart from the nine notified mining companies. Thus, RBI stopped the process of notifying the names of overseas mining companies from whom an importer may import rough diamonds in India. In turn, it is left to the best commercial judgement of the banks and industry.

The RBI had in 2007 notified the names of five mining companies to whom an importer, other than a state-run entity, was allowed to make advance remittance without any limit and without bank guarantee or standby letter of credit for import of rough diamonds. The list had since been increased to nine and has now been relaxed completely, subject to certain conditions like the advance payments should be made strictly as per the terms of the sale contract and should be made directly to the account of the company concerned among others. Reportedly, the Gem and jewellery exports fell marginally last fiscal due to a 5.5 per cent -fall in outbound shipments of cut and polished diamonds. However, the gold jewellery segment rebounded with a 17.8 per cent rise.

The gross outbound shipments of gems and jewellery were $39.9 billion in FY15 compared with $40.15 billion in FY14. The downturn in China, unrest in West Asia, slowdown in Europe and the depreciation of the Russian rouble affected exports. In the month of April, owing to slow down in exports, more than 45 per cent of the diamond-manufacturing units in Surat have decided to go on a three-week vacation to cut down inventory and reduce production. There are 2,700 units in Surat that employ five lakh people.

 

Courtesy: Business Standard