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NEW DELHI: After successfully clamping down on gold imports to bring the runaway current account deficit under control, the government has set its sights on diamonds, precious and semiprecious stones, and precious metals, which it says are being round-tripped through duty free special economic zones (SEZs), with traders illegally creaming off the arbitrage.
The department of commerce says it has uncovered a racket that involves the diversion of gems and jewellery into the domestic market through SEZs, avoiding the import duty that's otherwise due on such items. The SEZ route, meant to be used by importers for value addition and re-export, is being used a giant loophole, according to the government. Indiais a global hub for diamond polishing and ornament making and gems and jewellery account for a substantial portion of the country's exports.
The department of commerce, looking to ban jewellery imports through SEZs...