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Special Notified Zones: DGFT redefines who may trade rough diamonds

By CAShorts DeskPublished Source: DGFT Notification No. 42/2026-27 (9 October 2026); A2Z Taxcorp. Background: PIB (28 March 2023, 1 April 2026), DGFT Notification 11/2015-2020, Kimberley Process website, GJEPC (2019)

Special Notified Zones: DGFT redefines who may trade rough diamonds
Illustration (AI-generated)

The Directorate General of Foreign Trade on 9 October 2026 amended Para 4.49 of the Foreign Trade Policy, 2023. Foreign diamond-mining companies, their sightholders, and brokers or auction entities covered by Entry 13F of Schedule IV of the Income-tax Act, 2025 may import rough diamonds into Special Notified Zones and auction, sell or re-export them under Customs supervision.

Syllabus: GS3 · Indian Economy & Growth; Prelims · Current Affairs & IR; Prelims · Economy & Social Development

Why it matters

For a small diamond-cutting firm in Mumbai or Surat, the raw material is the rough stone that foreign miners and their dealers sell. A zone at home lets the firm inspect and bid for those stones in India, while the seller can bring lots on consignment and send the unsold ones back abroad. The amended paragraph now tells foreign sellers plainly who qualifies, using the same categories as the Income-tax Act, 2025, so trade law and tax law describe the same firms. The larger question is whether India, which processes 14 of every 15 diamonds set in jewellery worldwide according to a Commerce Ministry release of March 2023, can also become the place where rough diamonds are sold.

Prelims pointers

  • Foreign Trade (Development and Regulation) Act, 1992: Section 5 lets the Centre notify and amend the Foreign Trade Policy; Section 6 provides for the Director General of Foreign Trade.
  • The 1992 Act repealed the Imports and Exports (Control) Act, 1947; under Section 7, every importer or exporter needs an Importer-Exporter Code from the Director General.
  • DGFT: attached office of the Department of Commerce, Ministry of Commerce and Industry; notifies the Handbook of Procedures by Public Notice, while FTP amendments come by notification.
  • Foreign Trade Policy, 2023: in force from 1 April 2023 with no end date; it continues until amended, unlike the earlier five-year policies.
  • CBIC: statutory board under the Central Boards of Revenue Act, 1963, in the Department of Revenue, Ministry of Finance; administers Customs and GST; formerly CBEC.
  • Income-tax Act, 2025: replaced the Income-tax Act, 1961 from 1 April 2026; administered by the Central Board of Direct Taxes.
  • Kimberley Process: began when southern African producers met at Kimberley, South Africa, in May 2000; its certification scheme, in force since 2003, keeps conflict diamonds out of trade.

Practise a UPSC-style question

With reference to the amended Para 4.49 of the Foreign Trade Policy, 2023 on Special Notified Zones, consider the following statements:

1. The procedure for re-exporting unsold rough diamonds from these zones is specified by the Reserve Bank of India.

2. Foreign diamond-mining companies and their sightholders are among the entities allowed to import and auction rough diamonds there.

Which of the statements given above is/are correct?

  1. (a) 1 only
  2. (b) 2 only
  3. (c) Both 1 and 2
  4. (d) Neither 1 nor 2
Show the answer

Answer: (b) 2 only

1 is incorrect: the procedure for unsold rough diamonds is specified by the Central Board of Indirect Taxes and Customs (CBIC); an RBI notification of 2014 was only the old eligibility test. 2 is correct: the revised paragraph names foreign diamond-mining companies, their sightholders, and brokers, aggregators or tender and auction entities covered by Entry 13F of Schedule IV of the Income-tax Act, 2025.

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