The measure, introduced in the Lok Sabha on August 4, has been welcomed by the Gem and Jewellery Export Promotion Council (GJEPC), which said it removes the biggest hurdle that has prevented global mining companies and traders from using India as a rough diamond trading base.
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The proposed amendment inserts Entry 13F in Schedule IV of the Income-tax Act, 2025, exempting income earned by eligible foreign companies from the sale of rough diamonds through SNZs from October 1, 2026, to March 31, 2041.
Calling it a “defining moment” for the industry, GJEPC Chairman Kirit Bhansali said the long-term statutory exemption provides the certainty global players were looking for.
“For years, the one thing holding us back from becoming a global rough diamond trading hub was not capability or capacity—it was certainty. A 15-year statutory exemption removes that doubt entirely,” Bhansali said.
According to him, the move will allow India’s thousands of small and medium diamond manufacturers to source rough diamonds directly from global mining companies, auction houses and traders under a tax regime comparable to those in competing international trading centres.Industry executives believe the measure could significantly deepen trading activity at India’s Special Notified Zones, which were created to facilitate direct sales of rough diamonds by global miners to domestic manufacturers.
The Council also welcomed the government’s decision to widen the scope of eligible participants beyond mining companies to include sightholders, brokers, aggregators, and auction and tender entities. It said such a broad framework is essential to build liquidity and make India’s trading ecosystem globally competitive.
Another key feature of the amendment is the definition of rough diamonds, which covers all forms of rough stones—whether unworked, sawn, cleaved or bruted—and does not restrict sorted or assorted diamonds. According to GJEPC, this aligns the law with prevailing global trade practices and removes a long-standing area of ambiguity.
While welcoming the reform, the industry body urged the Central Board of Direct Taxes (CBDT) to notify compliance requirements well before the exemption comes into effect on October 1, 2026. It also sought corresponding amendments to the Foreign Trade Policy and customs regulations governing Special Notified Zones at the Bharat Diamond Bourse in Mumbai and the Surat Gem and Jewellery Hub to ensure policy alignment.
The industry has long argued that despite India being the world’s largest centre for cutting and polishing diamonds, the absence of a competitive tax framework prevented global rough diamond trading from shifting to the country. The latest amendment is expected to strengthen India’s position in the global diamond value chain by encouraging international mining companies and traders to conduct auctions and sales within the country.