Indians Fear SA Tax Might Harm Local Manufacturing

As South Africa is considering a five percent export tax on locally mined rough diamonds, Indian diamond dealers are starting to express concerns it might harm Indian polishing bottom line.

The proposed tax aims to protect and encourage the rather small South African polishing industry, estimated at manufacturing in value only 0.4 percent of global diamond output.

South African manufacturers want more then protectionist taxation, they are reportedly also asking for monetary incentives.

India might combat this in a number of ways. The obvious first move is trying to raise prices of polished, something polished traders are saying they are trying to do already because of the climbing prices of rough.

Another is brining skilled workers to South Africa but that will still end up with an increase in costs.

Depending on the wording of the proposed law, Indians might find that setting up local companies will allow them to route goods to plants in India without the need to pay the tax.