Context: 

To address declining exports and job losses in India’s diamond industry, the Department of Commerce has introduced the Diamond Imprest Authorization (DIA) Scheme, effective from April 2025. This initiative aims to reinforce India’s position as a global leader in the diamond trade while providing targeted support to exporters and protecting domestic interests.

About the DIA Scheme

• The scheme seeks to boost India's diamond exports, promote value addition, and maintain the country's dominance in the global diamond industry.
• Key Provisions:
• Duty-Free Imports: Allows the import of natural cut and polished diamonds of less than 0.25 carats (25 cents) without paying duty.
• Value Addition Mandate: Exporters must ensure a minimum value addition of 10% to qualify for the benefits of the scheme.

Eligibility Criteria

• Who Can Apply?
• Only two-star export houses and above are eligible.
• Companies with an annual export revenue of $15 million or more.
• Definition of Two-Star Export Houses: Businesses that export goods worth at least $15 million annually.

Significance of the Scheme

• Global Alignment: The scheme aligns with international practices of beneficiation, as seen in diamond-rich nations like Botswana, Namibia, and Angola, where local processing is mandatory.
• Enhancing Competitiveness: Rising costs and competition from mining countries have challenged India’s diamantaires. The scheme levels the playing field, preventing companies from relocating operations abroad.
• Encouraging Innovation: By reducing input costs and promoting advanced cutting and polishing techniques, the scheme fosters innovation in the diamond industry.

Impact on the Diamond Industry

1.   Export Trends: India processes 90% of the world’s diamonds but has faced a sharp decline in exports.

o    Exports fell to $32.71 billion in FY24, the lowest in three years, from $37.96 billion in FY23 and $38.94 billion in FY22.

2.   Employment Creation:

o    The labor-intensive nature of the diamond industry means the scheme can generate significant employment opportunities across the value chain, from artisans to processing units.

3.   Industry Support:

o    The scheme has potential to reduce costs, encourage innovation, and sustain India’s leadership in the global diamond trade.

Challenges and Opportunities

• Challenges:
• Rising production costs and a decline in demand from key markets like the US and China.
• Increasing competition from mining nations that emphasize local beneficiation and value addition.
• Opportunities:
• The scheme can encourage India’s diamantaires to adopt advanced technologies and processes, ensuring competitiveness in the global market.
• It provides a framework for long-term growth while ensuring job creation and economic stability.

Why the DIA Scheme is Crucial for India

India’s gems and jewellery exports have long been a significant contributor to the country’s economy, with major markets including the US, UAE, and Hong Kong. However, the recent decline in exports highlights the need for targeted interventions like the DIA Scheme.

The initiative not only addresses immediate challenges but also demonstrates India’s commitment to fostering innovation and ensuring its continued leadership in the diamond industry.