Confusion and uncertainty throng the Indian diamond industry following a Mumbai customs directive that asks importers to provide detailed description of goods with regards to their origin, size, shape, type, colour and clarity at time of import. The problem with this issue lies in the minute discrepancies that could invite trouble by customs officers in the form of seizure followed by massive penalties. This could potentially affect the manufacturing process of diamonds in the country’s leading cutting and polishing hub, Surat.
The Office of the Commissioner of Customs, Mumbai has directed importers and exporters to provide details in the bills of entry or shipping bills which are required in clearance of goods. The reasons for this is several reports of misdeclaration of goods and its values in the past for both importers and exporters. The standard practice of labeling the goods simply as rough diamonds seems incomplete according to the Customs Office.
This directive was met with massive outrage by the trade which firmly stated that there is no regulatory or industry standard for a uniform description of the details sought by the customs. This could create problems for every parcel as even a minor issue found in the shipment could cause seizure of the good and attract hefty fines. Additionally, the manufacturing activities would be affected and there might even be loss of jobs in Surat.
The trade has been subjected to constant harassment in the last six months as every 15 days new directives have cropped up complicating the export import process. The customs office has issued several show cause notices on technical grounds obstructing the ease of business. The trade fears that if this continues for a longer period of time, the diamond market will move to other countries like China.
Furthermore, industry executives simply could not furnish details of the goods as sought by the customs as rough diamonds are a naturally mixed lot and no homogenous description could accurately describe its properties.
India imported 1,650.18 lakh carats of rough diamonds, valued at $15.72 billion, in the financial year 2018-19. Rough diamond imports fell 17 per cent in value terms, indicating less demand for cut an polished diamonds due to the imposition of IGST. Cut and polished diamonds worth $23.82 billion in value terms were exported in fiscal year 2019, according to data from the industry body Gems and Jewellery Export Promotion Council (GJEPC).