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Duty on lab-grown-diamond imports will hurt local jewellery industry

Tuesday, 8 July 2014 - 6:50am IST | Place: Mumbai | Agency: dna

  • Lab-grown diamonds allow for assured supply of diamonds at reasonable prices

The diamond trade is aghast at news reports claiming that the government is considering the levy of 10% of duty on imports of of lab-grown (man-made) diamonds. Such a move could cripple the local gems and jewellery trade that employs more than 4 crore people.

Almost all traders dna spoke to said the total number of lab-grown diamonds that are alleged to have been discovered were around 60 stones during the past one year (though no person has yet been linked to such imports). Compared to millions of diamond roughs that are imported into India, these represent a minuscule fraction.

dna has access to RTI queries filed between relating to lab-grown diamonds, and there is no reply forthcoming from the Gems and Jewellery Export Promotion Council (GJEPC) on any of the issues raised.

Media reports also mention that GJEPC had appointed experts - A T Kearney and Bonas & Co (management consultants and De Beers brokers respectively) - to assist in the project of "establishing the current status, prepare a framework/guideline for the industry members to trade in natural and synthetic diamonds". But no details of their recommendations have been made available to the trade. This is compounded by the fact that differentiating between earth-mined and lab-grown diamonds is extremely difficult, and with no clear resolution of the final results.

The trade fears that such a rule will allow the customs department to impound diamond roughs for months on end to find out if any consignment contains lab-grown diamonds. The proposal is therefore absurd, they said. dna wrote to the president of GJEPC, but got no response from him.

Lab-grown diamonds have been welcomed worldwide – notably in the US and China -- because they allow for an assured supply of quality diamonds at reasonable prices. Many countries find these diamonds ecologically friendly, as they do not damage the environment.

Moreover, what India needs is a steady guaranteed supply of quality roughs. These roughs, irrespective of whether they are earth-mined or lab-grown, eventually end up in Indian cutting and processing centres, because this country cuts and polishes 10 out of 12 stones in the world, said an analyst.

Currently, most suppliers of earth-mined diamonds have not been able to guarantee a steady supply of roughs, thereby causing great turmoil in Indian labour markets.

The jewellery industry employs around 3.5 crore people who set diamonds into jewellery, while the diamond cutting and polishing centres alone employ over 8 lakh. Any disruption in supplies will hurt labour markets.

Supplies from mines overseas are also affected because most major mining centres like Zimbabwe and Botswana have started their own beneficiation centres, where they encouraging the cutting and polishing of gemstones. India, therefore, has to create alternative supplies of roughs. Lab-grown diamonds have given India that opportunity, and the lobby that wants to protect earth-mined diamonds – including the interests of the De Beers conglomerate, the biggest supplier of such diamonds -- is working overtime to stymie the entry of lab-grown diamonds into India, these sources said.

Lastly, export markets like the US have already warmed up to lab-grown-diamond-studded jewellery, because they offer better quality stones at reasonable prices. There is also the possibility of such lab-grown diamonds accelerating scientific research into new ways to build circuits and equipment – because diamonds can now be used in making circuit-boards and surgical equipment – and slapping a duty on them to protect earth-mined diamonds would be most unwise, they said.

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