Dubai is fast becoming an alternative destination for Indian diamond traders. The shift, caused by high taxes and administrative hurdles here, has started worrying traders in Mumbai, which is a major centre of the Rs 70,000-crore diamond export industry.
Industry sources said the number of Indian diamond trading firms in Dubai has gone up to around 100 compared to six in 1995, when traders began expanding their operations. The turnover of the trade in Dubai by Indian firms is Rs 1,000-Rs 1,200 crore per annum. The overall diamond turnover in Dubai is $4 billion (Rs 18,000 crore).
“It’s a big worry for us,” said Paresh Shah, a diamond trader in Mumbai. He said smooth administration and zero income-tax are making Dubai a favourite with traders. “Moreover, there is no import duty,” said Shah.
In comparison, income-tax in India is 33 per cent while import duty on diamonds is 5 per cent. In Dubai, duty on jewellery imports is 4 per cent, while in India it is 30 per cent. “Moreover, you get 3 per cent back in Dubai if you re-export jewellery,” said Shah.
The swift response of Dubai Customs adds to the benefits. “You get your (imported) parcel within 10 minutes of showing your papers,” said Shah, adding that the department works 24/7. “In India, it takes between five to eight days to get your parcel.”
Indian firms are now desperate to buy space in Dubai’s under-construction Almas Tower, a 65-storey building exclusively for the diamond trade that will be completed this year.
Indian firms, especially those run by younger people, prefer Dubai. “To start a unit here you need six to seven licences. In Dubai you need one,” said another trader who declined to be named.
“Dubai gives you access to unexplored markets like Iran, Saudi Arabia, Egypt and Oman,” added Sameer Shah, chairman of Lotus Ornaments.