Israel Asks India to Lower Diamond Import Tax

Israeli Industry, Trade and Employment Minister Ehud Olmert has asked his Indian counterpart Kamal Nath to lower the 5 percent import tax it levies on polished diamonds.

Olmert made the request during his current visit to India aimed at promoting commercial ties between the two countries. Nath, India's Minister of Industry and Trade, promised to consider the request.

India's booming consumer diamond jewelry market is giving the domestic diamond industry an additional, and prospering, new market. Israel is keen to see the tax on polished imports lowered, if not altogether abolished, to gain access to this market.

Israeli diamond dealers also want to supply Indian diamond jewelry manufacturers with the gems. The Indian consumer diamond jewelry market is estimated at $1 billion and its diamond jewelry exports are valued at $12 billion in the current fiscal year.

Although the diamond trade between the two countries during the first nine months of 2004 amounted to $1.2 billion, only $15 million was Israeli polished exports to India. During the same period, India exported $700 million worth of polished diamonds to Israel.

The two countries decided to start negotiating a trade cooperation agreement with the intention of signing it by mid 2005. The agreement is expected to deal with investment protection and resolutions to customs issues.