A 15-year income tax exemption proposal for rough diamond sales in India could significantly boost domestic trading, enhance competitiveness, and shift the global supply chain, with industry experts hailing it as a potential game changer.
India’s diamond industry could be on the verge of a major reshuffle if a proposed 15-year income tax exemption for rough diamond sales is approved. The measure, set out in the Taxation and Other Laws (Amendment) Bill, 2026, would allow eligible foreign mining and trading entities to sell rough diamonds through notified Special Notified Zones, including centres in Mumbai and Surat, without income tax on those transactions until 31 March 2041. For a country that already dominates cutting and polishing, the change is aimed at pulling more of the trade itself onshore.
The timing matters. India’s gem and jewellery exports rose 26.5% year-on-year in June 2026 to Rs.20,774 crore, according to industry data, helped by lower gold prices and stronger overseas demand. Yet the broader sector has still been dealing with tariff swings and geopolitical uncertainty. The Gem and Jewellery Export Promotion Council said exports in fiscal 2025-26 totalled $27.72 billion, down 3.32% from the previous year, even as the industry adjusted to a more diversified trade pattern.
At present, foreign sellers can show rough stones in India’s special zones, but much of the buying still happens through auctions held overseas. The Central Board of Direct Taxes has already issued clarifications under the existing framework for safe harbour rules in Special Notified Zones, including conditions on what qualifies as a raw diamond and the profit threshold for eligible foreign companies. The new Bill would go further by making India a more attractive place for actual sale and price discovery, rather than just display.
That is why industry executives are talking about Dubai and Antwerp. Kirit Bhansali, chairman of GJEPC, told the newspaper that the proposal could be a “game changer” and had been a long-standing industry demand. Colin Shah of Kama Jewelry said the tax change could shorten procurement by 15 to 20 days, cut out middlemen and lower raw material costs by up to 5%. Aarav Bafna of Akoirah by Augmont said it could improve access to rough supply and make pricing more competitive. Prithviraj Kothari of the India Bullion and Jewellers Association said local sourcing would ease working capital strain for smaller firms.
The possible gains are not just about exporters in Surat or Mumbai. If more rough trading moves into India, the benefits could flow through the entire supply chain, from larger manufacturers to the more than 5 million workers involved in cutting and polishing. Crisil Ratings has separately said diamantaires are likely to see 6% to 7% revenue growth in fiscal 2027, helped by tariff relief in the US, though it warned that global tensions could still interfere. Put simply, the proposed tax holiday is not only about attracting foreign miners; it is about whether India can turn its long-held manufacturing strength into a bigger share of the value chain.
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