India has approved a tax measure intended to encourage more international rough-diamond transactions to take place within the country.
The Taxation and Other Laws (Amendment) Bill, 2026, provides eligible foreign companies with an income-tax exemption on qualifying rough-diamond sales conducted through India’s Special Notified Zones. The exemption is scheduled to apply from October 1, 2026, until March 31, 2041.
Wider Range of International Sellers Covered
The framework is not limited to diamond-mining companies. Foreign brokers, aggregators, sightholders and businesses conducting tenders or auctions may also qualify, provided their transactions meet the prescribed conditions.
Sales must take place within an approved SNZ, including designated facilities at the Bharat Diamond Bourse in Mumbai and the diamond-trading zone in Surat. Participating companies will also be required to maintain and submit information in the form prescribed by the Indian tax authorities.
The broader eligibility criteria reflect the structure of the rough-diamond market, in which stones may pass through several intermediaries before reaching manufacturers. Including these participants may increase the range of goods available to Indian buyers and encourage more transactions within the notified zones.
Expanding India’s Role in Rough-Diamond Trading
India processes approximately nine out of every 10 diamonds manufactured worldwide, although a substantial share of international rough trading continues to take place outside the country. Antwerp and Dubai remain important centres for auctions and sales, including transactions involving diamonds intended for Indian manufacturers.
The new tax treatment is intended to encourage overseas suppliers to complete more of these transactions in India. This could give manufacturers, including smaller businesses, additional opportunities to source rough directly from mining companies, auction operators and international traders.
Surat has also increased its role in the import and sale of rough diamonds. The city handled imports worth approximately $8.43 billion during the 2025–26 financial year, compared with about $1.96 billion through Mumbai. More than one million carats of rough diamonds, valued at approximately $100 million, were recently displayed at the Surat Diamond Bourse, alongside auctions conducted by several companies.
Measure Introduced During a Difficult Market
The exemption comes as India’s natural-diamond sector continues to face weak international demand and uncertainty in several important export markets.
During the 2024–25 financial year, exports of cut and polished diamonds declined by 16.8% to $13.3 billion, their lowest level in nearly two decades. Rough-diamond imports fell by 24.3% to $10.8 billion as manufacturers reduced purchases in response to lower demand.
Encouraging overseas sellers to conduct transactions in India may reduce some of the logistical and tax-related considerations associated with sourcing rough through foreign trading centres. It could also support greater use of the trading facilities in Mumbai and Surat. The measure, however, addresses the location and tax treatment of rough-diamond sales rather than the broader weakness in global demand for polished diamonds.
Implementation and Industry Considerations
Attention will now turn to the rules governing reporting, documentation and eligibility. The Central Board of Direct Taxes is expected to prescribe the information that participating foreign companies must maintain and provide.
The Gem and Jewellery Export Promotion Council has also called for related provisions under India’s foreign-trade policy and customs framework to be aligned with the expanded categories of eligible sellers. Straightforward and consistent procedures are likely to influence how overseas suppliers respond to the exemption.
The 15-year duration gives eligible companies a defined period in which to assess participation in India’s notified trading zones. The measure’s effect will depend on supplier participation, regulatory implementation and the volume of rough-diamond business ultimately conducted in Mumbai and Surat.
