Lab grown diamond industry upbeat, natural diamond sector disappointed

“While research and development grant will be provided to one of the IITs for the development of lab grown diamond seeds and machines, the other sectors of the industry have been ignored. The reduction in gold custom duty in this budget was our big expectation, which has severely hampered the industry and encouraged smuggling and grey market. GJC has been actively representing the reduction in customs duty of gold over the past many years. The silver dore bars custom duty has been brought at par with gold and platinum in this budget. This move will adversely affect the masses,” the statement stated.

Data shows that the export of cut and polished LGD increased during April-December 2022, while the export of cut and polished natural diamonds dipped slightly during that period, as per the Gems and Jewellery Export Promotion Council (GJEPC).

In the budget, Sitharaman announced grants for research and development for LGD to encourage indigenous production of LGD seeds and machines and reduce import dependency.

On January 27, a delegation led by GJEPC Gujarat region chairman Vijay Mangukiya and Indian Dia-mond Institute (IDI) director Dinesh Navadia, met Union Mini-sters Mansukh Mandaviya, Dar-shana Jardosh and Purshottam Rupala. They urged the ministers to appeal to Sitharaman to implement the earlier announced eradication of two per cent equalisation levy on rough diamonds sourced through e-auctions and reduce the import duty on cut and polished diamonds from 5 per cent to 2.5 per cent and also reduce import duty from 12.5 per cent to 4 per cent on precious metals like gold, silver and platinum.

The GJC has said it would meet Sitharaman on February 4 in Mumbai to “stress on the important concerns such as reduction in custom duty, EMI on jewellery, relief in capital gain tax and gold monetisation scheme etc.”, the statement said. In the Budget, the import duty of 5 per cent on LGD seeds was scrapped and R&D grant was announced for an IIT for five years to encourage indigenous production of LGD.

Mangukiya said, “The Union budget is good for LGD players, and they are minute in the diamond industry. The 5 per cent import duty LGD seeds from China has been removed. There is no import duty on rough natural diamonds. To promote LGD industry, government has announced incentives to an IIT for research work, which will benefit the industry.”

Adding that there are around 40 companies in Surat that import seeds to grow LGD and around 450 factories that cut and polish only LGD diamonds, he said, “The natural diamond factories also cut and polish LGD, when there is shortage of natural rough diamonds. The salary of workers are same for cutting and polishing of both types of diamonds. There are around 6 lakh diamond cutting and polishing artisans in the city.”

Surat Lab Grown Diamond Association president Babubhai Vaghani said, “We welcome the announcement for removing 5 per cent duty on LGD seeds. There is a major scope for this industry as the diamond prices are much cheaper than natural diamonds. Over 80 per cent of cut and polished LGD are exported… India consumes just 20 per cent of LGD. Now the exports of LGD will shoot up and even huge quantity of diamond seeds will be imported from China. Many more new players will enter the industry and many will get employment.”

Adding that their demands were not looked into, Mangukiya said, “The Finance Minister has reduced 2.5 per cent on import of gold, earlier it was 12.50 per cent. The import duty on gold jewellery has been increased from 20 to 25 per cent. This will benefit local jewellery manufacturers.”

As per figures from GJEPC, cut and polished Lab Grown Diamonds worth Rs 10,587.36 crore was exported between April and December 2022, which was 54.22 per cent higher than previous year’s exports worth Rs 6,865.32 crore. The exports of natural polished diamonds from April to December 2022 was Rs 1,30,275.47 crore, which is 1.24 per cent less than previous year’s figure of Rs 1,33,737.22 crore.