Cut diamond imports surge fourfold but no one knows the reason
Imports of cut or polished diamonds in the current financial year have surged about fourfold and no one quite knows why. The stones don’t seem to be coming from the usual sources such as Dubai, Belgium and Hong Kong. According to commerce department data, most are from unspecified countries.
Officials and trade experts told ET there didn’t seem to be any easy explanation for such a spike. Imports of cut diamonds that haven’t been mounted rose 284% in April-November 2017 to Rs 40,809 crore, or $6.3 billion, from Rs 10,672 crore in the year-earlier period. Gems and Jewellery Promotion Council chairman PS Pandya said total imports should not have been more than $2 billion in the normal course.
Of the total, cut diamond imports worth Rs 32,028 crore, or around 78%, are from unspecified sources. Interestingly, imports from unspecified sources had amounted to Rs 18.2 crore in the year-earlier period but for all of FY17 stood at Rs 519 crore.
Imports from Hong Kong, the biggest source of polished diamonds, in the April-November period amounted to Rs 3,848 crore, down 25% from the year earlier period.
Imports may be categorised as being from unspecified sources when the country of origin is not mentioned on the bill of entry for some reason but this is not a common occurrence, trade experts said. Any such imports are generally marked to specific countries when the numbers are reconciled, they said.
The development comes as the diamond industry has come under scrutiny following the alleged fraud at Punjab National BankBSE -1.15 % involving jewellers Nirav Modi, Mehul Choksi and their companies.
A trade expert said an increase in polished diamond imports should have led to a dip in that of roughs, but this has not happened. There has been no commensurate increase in exports of polished diamonds either. On the contrary, exports of pearls and precious and semiprecious stones dropped 1.6% in the April-December period to Rs 1.21lakh crore from the year earlier.
The Directorate of Revenue Intelligence had in 2013 and 2014 flagged the use of diamonds and precious stones as fronts for trade-based money laundering, some of which was through banking channels. The agency had flagged a number of cases as well as the suspected modus operandi, alerting the Special Investigation Team on black money.