The government has introduced the Taxation and Other Laws (Amendment) Bill, 2026, offering a 15-year tax exemption for foreign entities selling rough diamonds in India’s Special Notified Zones. This move aims to bypass international hubs like Dubai and Antwerp, potentially reducing procurement costs and boosting efficiency for India’s massive diamond processing industry.
On August 4, 2026, the Indian government introduced the Taxation and Other Laws (Amendment) Bill, 2026, in the Lok Sabha, aiming to transform the country into a global hub for rough diamond trading. A central feature of this legislation is a 15-year income tax exemption, effective until March 31, 2041, for eligible foreign mining and trading entities. This policy covers the sale of rough diamonds conducted within India’s designated Special Notified Zones (SNZs), such as those located in Mumbai and Surat.
The bill represents a significant shift from the previous regulatory framework, which allowed foreign firms to only showcase their rough diamonds within Indian SNZs. Under the proposed rules, eligible entities—including mining companies, sightholders, and auction houses—would be permitted to conduct direct sales. This change seeks to reduce the reliance of Indian diamond processors on international trading centers like Dubai and Antwerp, which currently control a large share of the global rough diamond trade.
For the Indian diamond industry, which cuts and polishes roughly 14 out of every 15 diamonds globally, this initiative is expected to streamline the supply chain. Industry stakeholders note that direct domestic procurement could eliminate the need for costly and time-consuming travel to international auctions. By enabling local purchase, the move is projected to shorten procurement cycles by approximately 15-20 days and reduce raw material costs by up to 5%. This improvement in price competitiveness is seen as a way to unlock $3-5 billion in additional polished diamond exports.
For domestic Micro, Small, and Medium Enterprises (MSMEs), the ability to source raw materials locally could significantly lower working capital requirements. Currently, these smaller processors often bear the cost of high middleman markups. A direct supply chain, supported by the tax-free status for foreign sellers, is intended to provide better price discovery and steady inventory access.
Despite the positive industry outlook, investors should note that the initiative is still in the legislative process. The bill must be passed by both houses of Parliament to become law, although it replaces an ordinance that was issued in June 2026. Furthermore, the ultimate success of this diamond hub status depends on the willingness of global mining firms to shift their sales operations from established international centers to India. The industry also remains sensitive to global market volatility, geopolitical trade factors, and shifts in international tariff policies. The next important steps to track will be the parliamentary approval of the bill and the subsequent implementation guidelines issued for foreign entities participating in Indian SNZs.