India Targets Rough Trading

I’m not sure if you’ve noticed, but the diamond trading centers seem to be getting more assertive in claiming their positions in the market.

Over the past year, Antwerp has regained some of its lost stature through effective lobbying that helped secure exemptions from US tariffs for European-sourced diamonds. The UAE has maintained its momentum, recording record diamond trading levels in 2025, while Qatar established a diamond bourse that was welcomed last month as the newest member of the World Federation of Diamond Bourses.

Last week, however, India arguably made the most significant move of all, introducing legislation that would enable foreign companies to sell rough diamonds tax-free in its Special Notified Zones.

Under the existing regime, qualifying foreign miners are taxed on an assumed profit equal to 4% of their sales, resulting in an effective tax of about 1.25% to 1.4% of the sale value before applicable surcharges. Sightholders and other foreign rough traders, meanwhile, can face the standard 35% corporate tax on profits generated in India.

That helps explain why rough diamonds typically travel through Antwerp and Dubai before making their way to India, where the vast majority are cut and polished.

Indian manufacturers can import rough for processing, but international trading has traditionally taken place offshore, where more favorable tax regimes encourage companies to book their trading profits. Indian groups often operate trading companies in Antwerp or Dubai that buy rough and resell it to other companies or to their manufacturing businesses in India, allowing the trading profit to remain offshore.

The proposed legislation would change that dynamic. It would exempt qualifying rough-diamond sales in the zones from income tax altogether, extending the benefit to mining companies, sightholders, brokers, aggregators and tender and auction operators.

If passed, the legislation could elevate India as a rough-trading center and restore some of the competitive edge it lost through unfavorable US tariffs. More broadly, it adds another dimension to an increasingly competitive landscape as the major trading centers vie for a greater share of the diamond trade.

This blog first appeared in the August 10 Pressing Matters Executive Memo. Read the full memo here, Pressing Matters.

Image: Bharat Diamond Bourse (The Diamond Press)