Alrosa Seeks Tax Benefit for Diamond Sales in India

Mumbai: Russian rough diamond miner Alrosa has sought tax neutrality from the government to set up its representative office in India, reports Business Standard.

Alrosa has started making small allocations through its intermittent exhibition of rough diamonds in the Special Notified Zone (SNZ) at the Bharat Diamond Bourse (BDB). The company sells large quantities through Dubai and Belgium.

Rough diamond allocations through Dubai attract zero tax and through Belgium 0.55 per cent of profits. India has a turnover tax through advance pricing of rough diamonds that is a multiple of the levies in Belgium.

Sources said Alrosa wanted taxes equal to Belgium to increase its supply to Indian diamond processors. Alrosa contributes 7-8 per cent of India’s total annual imports of 153.31 million carats (worth $17.08 billion).

“Diamond mining companies seek a business environment in India similar to that in Dubai and Belgium. Ultimately, the rough diamonds they offer to buyers in Dubai and Belgium are routed to India. We have requested the government to bring down taxation to the level of Belgium. The current environment allows business to go to Dubai and Belgium which has the potential to come to India,” said Mr. Sabyasachi Ray, executive director, Gems and Jewellery Export Promotion Council (GJEPC), the apex body under the commerce ministry.

To ease trade the government signed a memorandum of cooperation with Alrosa that is expected to lead to equalisation of the tax structure on rough diamond allocations. India is the largest diamond cutting and polishing centre in the world and Alrosa is the largest producer of rough diamonds. “The GJEPC has been encouraging diamond mining companies to sell rough diamonds directly in India, and the memorandum may well be the first step to realising this goal,” said Mr. Praveenshankar Pandya, chairman, GJEPC.

China has emerged as India’s second largest destination of gems and jewellery exports in 2016-17 due to a slowdown in the EU and an import tax levied by the United Arab Emirates. India’s gems and jewellery exports to China jumped 28.48 per cent to $2.48 billion in 2016-17. China and Hong Kong purchased over $12.97 billion worth of precious metals and jewellery from India in 2016-17, a 17 per cent increase from the previous year.

“We organised several bilateral trade opportunities, including buyer-seller meetings, for Indian diamond jewellery manufacturers. So the increase in jewellery sales to China was expected. We see 100 per cent growth opportunity in a few years,” said Ray.