The world’s largest office complex, Surat Diamond Bourse was built to make the city a global diamond trading hub. Two years after opening, most of its floors are still dark. One of the several reasons for this is the government’s tax structure itself.
Surat, which polishes about 14 of every 15 diamonds sold worldwide, has also long wanted to own the trade in rough stones, which is currently routed through Antwerp and increasingly Dubai. That intent has not reached an outcome.
Historically, rough diamonds have been traded through two channels. The primary market accounts for around 65 per cent of global rough diamond trade, where mining companies sell directly to contracted buyers, manufacturers and traders.
The remaining volumes are traded through secondary channels, such as tenders, auctions and brokerage platforms operated by entities such as Bonas, Hennig, Koin International and others. Establishing a rough diamond trading hub in India would integrate trading with manufacturing, improve price discovery, reduce transaction and logistics costs, attract global participants, and enable India to capture a larger share of value addition within the diamond supply chain.
Indian manufacturers currently travel regularly to trading centres such as Dubai, Antwerp and other global hubs to inspect and purchase rough diamonds. This increases cost, consumes management time and creates avoidable inefficiencies. Bringing rough diamond trading closer to the world’s largest manufacturing centre is, therefore, a natural progression for the industry.
“Secondary market transactions have traditionally been concentrated in Dubai, Antwerp and Hong Kong due to their favourable tax structures, regulatory certainty, ease of doing business, flexible settlement mechanisms and mature financial ecosystems. India has the strengths to emerge as a leading global rough diamond trading hub. A globally competitive and facilitative tax and regulatory framework is essential to realise this potential,” says Sabyasachi Ray, executive director of the Gems and Jewellery Export Promotion Council (GJEPC).
India’s Special Notified Zones (SNZs) in Mumbai and Surat were meant to let global miners sell roughs directly to Indian buyers. But because any sale triggered steep Indian income tax on the foreign seller, miners could only display stones; the actual transaction happened elsewhere. By the industry’s own estimate, around 60 per cent of roughs shown at Indian SNZs returned to Dubai or Antwerp to be sold, then were shipped back.
Dubai levies no direct tax on displayed roughs; Belgium charges 0.187 per cent. India’s roughly 40 per cent rate on foreign firms made the choice obvious. Data from the Global Trade Research Initiative, a Delhi-based think-tank that publishes trade policy analysis, has captured the drift. Belgium’s share of India’s rough imports fell from 37.9 per cent in FY20 to 17.6 per cent in FY24 while Dubai’s climbed from 36.3 per cent to nearly 64.5 per cent in 2025.
The Union Budget in July 2024 was billed as the fix. It scrapped the 2 per cent equalisation levy on online rough purchases and introduced a ‘safe harbour’, letting foreign miners declare a flat 4 per cent margin on SNZ sales. Whether it has moved trade is another matter. More than a year on, there is no published evidence of miners transacting at scale through the SNZs, and Dubai’s dominance in the latest available figures is undented.
Meanwhile, Surat’s optimism has been hitting unexpected headwinds. The global rough market is in a slump. De Beers has cut its 2026 production guidance and trimmed both prices and its sight-holder roster; lab-grown stones now account for over half of US engagement rings and even Antwerp’s trade contracted more than 22 per cent in 2025.
Despite the global gloom, the potential of India’s domestic market remains unexplored, and that is the industry’s latest bet. Diamantaires estimate that rough diamond trading in India will create significant employment and entrepreneurial opportunities by generating new jobs in diamond trading, assortment/sorting, logistics and allied services. This promises to encourage Indian businesses to participate more actively in global rough diamond trade, strengthening sectors such as banking, insurance, trade finance and professional services, and driving investment, value addition and growth across India’s diamond manufacturing ecosystem.
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