India Launches New Diamond Imprest Authorization Scheme To Boost Sector

In a bid to bolster India’s position as a global leader in the diamond trade, the Department of Commerce unveiled the Diamond Imprest Authorization (DIA) Scheme on Tuesday. The scheme, which will take effect in April, aims to rejuvenate the country’s diamond industry, which has been grappling with decreasing exports and job losses.

The DIA Scheme allows for the duty-free import of natural cut and polished diamonds under ¼ carat (25 cents), provided exporters meet a value addition requirement of at least 10%. This incentive is designed to make Indian exporters more competitive while safeguarding domestic interests, the Ministry of Commerce stated in a press release.

To ensure that the benefits of the scheme reach the right businesses, only exporters that qualify as two-star export houses—those with annual export revenues exceeding $15 million—will be eligible. A two-star export house is defined as a business that exports goods worth at least $15 million in a year.

Aligning With Global Standards

The DIA Scheme is in line with global beneficiation practices followed by diamond-rich nations like Botswana, Namibia, and Angola, where local processing of diamonds is a mandatory requirement. By emphasizing value addition, the initiative aims to strengthen India’s standing as a processing hub for diamonds, a sector in which India already dominates, processing 90% of the world’s diamonds.

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Despite its leadership, India’s diamond sector has been under increasing pressure due to growing competition from diamond mining countries and the global economic slowdown. Rising operational costs and declining export demand have strained the industry, making it crucial for India to maintain its competitive edge.

The DIA Scheme addresses these challenges by offering Indian diamantaires a more level playing field, helping them stay competitive without having to move operations overseas.

Expert Praise And Industry Impact

Industry experts have expressed strong support for the DIA Scheme. Vipul Shah, Chairman of the Gem and Jewellery Export Promotion Council (GJEPC), praised the initiative, noting that it could transform the industry by reducing input costs and encouraging innovation in cutting and polishing. “It’s a bold step that not only supports MSME exporters but also sends a clear message to the world about India’s commitment to remain a global leader,” Shah said.

The scheme expect to create jobs across the value chain from artisans to processing units and help revitalize the labor intensive sector.

Export Challenges Amid Declining Global Demand

India’s diamond and jewellery exports have been struggling in recent months. In FY24, exports reached $32.71 billion, a three-year low, down from $37.96 billion in FY23 and $38.94 billion in FY22. A decline in demand from major markets like the US and China contributed to this downturn, as reported by the commerce ministry’s Niryat portal.

The Gems and Jewellery Export Promotion Council (GJEPC) had initially targeted $40 billion in exports for FY24, buoyed by higher sales to the UAE. However, the sector faced significant headwinds due to reduced global demand.

India imports rough diamonds, as it does not produce them in large quantities. However, the country remains a key player in the global gems and jewellery market by adding value to these imports through processing and exporting finished products worldwide, including to the US, Hong Kong, and the UAE.

As the DIA Scheme rolls out in April, industry leaders are hopeful that it will provide the much-needed support to keep India at the forefront of the global diamond trade.