Diamond traders of Indian origin in Belgium are becoming skeptical about continuing business from there. This is following a raid by the Antwerp income tax (I-T) authorities in January end when diamonds worth Rs 250 crore was seized.
Even as three months have passed, authorities have not released the diamonds. About 10 odd traders were raided in Antwerp, the major diamond hub in Belgium.
Sources in Mumbai’s diamond market said that some traders in Antwerp are thinking to move to Dubai or come back to India. There are about 300 Indian families indulged in diamond trade in Antwerp.
"Traders want to shift because there is no income tax in Dubai, a fast growing diamond hub," said a diamond merchant in the Mumbai market requesting anonymity. He added that in Mumbai, though the tax rate is high at 33 per cent, diamonds are not seized during I-T raids here as they fall under stock. As per rules, stocks can’t be seized during I-T raids in India.
Mumbai traders said that even though the overall business in Mumbai was not much affected by the Antwerp raid, diamond businessmen in Belgium city are scared about future. "If the stocks are seized and locked for such a long time, it affects business," said a trader in Mumbai who has base in Antwerp as well.
Naveen Mehta, President of Mumbai Diamond Merchants’ Association accepted that some traders in Antwerp are thinking of going to Dubai. "So far nobody has shifted but if such a thing happens again, people will think if to do business or not," said Mehta. He added that those raided are facing (business) problems.
Those in the Mumbai market said that another such incident would be a big blow to the trade as about 80 per cent of raw diamonds reaching India comes from Antwerp. The raw diamonds are processed and polished in Mumbai and Surat and then exported to various parts of the world.
Belgium is the largest diamond trade country having business worth over Rs 1,00,000 crore. Compared to this India has Rs 70,000 crore worth diamond export industry. Most part of the export is done from Mumbai.
Hardik Hundiya, a diamond trade expert said that some businessmen in Antwerp are seriously thinking of moving to Dubai. "For diamond traders, Dubai is as it is becoming favourite destination because of zero income tax criteria," said Hundiya adding that besides this the Customs duty is also very low.