Is a diamond trading business legal in India? Yes — and India isn’t just a participant in this trade, it’s genuinely the global centre of it. India cuts, polishes, and certifies over 90% of the world’s diamonds by volume, with the Surat cluster alone processing a scale unmatched anywhere else. But this industry carries a distinctive international compliance layer that most retail businesses never encounter: the Kimberley Process Certification Scheme, a UN-mandated mechanism specifically designed to keep conflict diamonds out of legitimate trade, and India has just taken on a genuinely significant role within it.
From 1 January 2026, India assumed the Chair of the Kimberley Process Certification Scheme for the third time — a body spanning 60 participants representing 80 countries. This isn’t just symbolic; it reflects how central India’s compliance infrastructure has become to global diamond trade governance, and it’s a useful moment to understand exactly what that infrastructure actually requires of anyone trading in this space domestically.
The Kimberley Process: Why It Specifically Matters for Rough Diamonds
The Kimberley Process Certification Scheme, in effect since January 2003, is the only global mechanism specifically governing international trade in rough diamonds, aimed squarely at preventing conflict diamonds from entering legitimate supply chains. India has been a founding participant since the scheme’s inception, and its role has only deepened over time, culminating in this current Chairpersonship.
For anyone trading in rough diamonds specifically — the uncut, unprocessed stones entering the supply chain before India’s cutting and polishing industry transforms them — this scheme carries direct, mandatory compliance obligations, not just an abstract international commitment.
GJEPC Membership: Mandatory for Rough Diamond Import and Export
This is the specific, actionable requirement worth understanding clearly. Under a government notification issued through the Directorate General of Foreign Trade, import or export of rough diamonds is permitted only to entities registered as members of the Gem & Jewellery Export Promotion Council (GJEPC) — the body designated as India’s official Kimberley Process Importing-Exporting Authority.
- GJEPC membership serves as the gateway credential specifically for rough diamond trade, and the government has structured this as industry self-regulation — GJEPC oversees its own members’ compliance with Kimberley Process norms rather than requiring separate government vetting of each transaction
- Every shipment of rough diamonds entering or leaving India must carry a Kimberley Process Certificate (KPC), submitted to GJEPC for verification before customs release
- The KPC application can be filed by GJEPC members directly, or by non-members through a separate application process, with agents able to apply on behalf of either
- Once issued, a KPC remains valid for one year, after which renewal through GJEPC is required before further rough diamond shipments can proceed
Does This Apply If You’re Just Trading Polished Diamonds Domestically?
This is worth clarifying directly, since the heaviest compliance weight sits specifically with rough, unprocessed diamonds crossing international borders, not domestic retail trading of finished, polished stones or diamond jewellery.
- If your business involves buying and selling already-cut and polished diamonds within India — supplying jewellers, retailing directly, or wholesaling finished stones domestically — you don’t need GJEPC membership or a Kimberley Process Certificate for that specific domestic activity
- The Kimberley Process obligation attaches specifically to the import or export of rough diamonds, given that’s precisely the point in the supply chain where conflict-sourcing risk exists
- That said, if your business does import polished or cut diamonds from abroad, you’ll still need an Import Export Code (IEC) and proper customs documentation, even though the Kimberley Process Certificate requirement specifically targets rough stones
So a domestic diamond retailer or jewellery business dealing purely in finished stones sourced through India’s own established cutting and polishing supply chain faces a genuinely lighter compliance path than a business specifically importing or exporting rough diamonds internationally.
GST on Diamonds: Rates Across the Value Chain
Diamond taxation follows a genuinely distinctive rate structure that shifts depending on where in the value chain your business operates:
- Rough diamonds attract 0.25% IGST at import
- Cut and polished diamonds attract IGST ranging from 0.25% to 1.5%, depending on the specific category
- Diamond jewellery attracts 3% IGST at the time of import
- IGST paid at customs clearance can be claimed as Input Tax Credit against your output GST liability, provided you hold a valid GSTIN and file your returns accurately and on time
A genuinely useful recent development worth knowing: as of September 2025, IGST on natural cut and polished diamonds up to 0.25 carats, imported under the Diamond Imprest Authorisation Scheme, was reduced to nil for eligible importers — a meaningful cost relief specifically for businesses dealing in smaller polished stones under this scheme.
IEC and Standard Business Registration
Beyond the diamond-specific compliance covered above, the underlying business needs the standard registrations expected of any trading or import-export business:
- Import Export Code (IEC), mandatory for anyone importing or exporting diamonds, whether rough or polished
- GST registration, following standard thresholds, though most genuine diamond trading businesses given transaction values will register early regardless
- Business structure registration — partnership firms, LLPs, and private limited companies can all import diamonds provided they’ve secured both IEC and, where applicable, GJEPC membership
The Rise of Lab-Grown Diamonds: A Different Compliance Picture Emerging
Worth noting as a genuinely evolving part of this industry: India’s Surat cluster has increasingly moved into lab-grown diamond production alongside natural stones. Since lab-grown diamonds aren’t mined, they fall outside the Kimberley Process’s specific conflict-sourcing concerns, which were built entirely around natural diamond origin verification. That said, as this segment grows, expect increasing regulatory and consumer-protection attention around clear disclosure — ensuring lab-grown stones are never marketed or sold ambiguously as natural diamonds, which would raise the same kind of misrepresentation concerns covered for imitation jewellery elsewhere in this series.
What Happens If You Skip Kimberley Process or GJEPC Compliance
Given how seriously India — now chairing the international body overseeing this scheme — treats rough diamond compliance, the consequences here are genuinely significant:
- Importing or exporting rough diamonds without valid GJEPC membership and a proper Kimberley Process Certificate is a direct violation of the government’s mandatory trade notification, exposing the business to customs seizure and enforcement action
- Missing IEC registration blocks legal import or export activity entirely, regardless of the specific diamond category involved
- Given India’s heightened international role in Kimberley Process governance through 2026, enforcement attention on rough diamond sourcing compliance is unlikely to loosen — if anything, expect continued scrutiny given the country’s current leadership position within the scheme
- Beyond formal penalties, non-compliant sourcing carries real reputational risk in an industry where buyers, particularly international ones, increasingly expect verifiable conflict-free provenance
FAQs
Q1. I want to open a jewellery shop selling polished diamond pieces sourced from Indian wholesalers — do I need GJEPC membership?
No, GJEPC membership and Kimberley Process Certification apply specifically to rough diamond import and export. Domestic retail of already-polished, finished diamonds and jewellery doesn’t require this specific certification.
Q2. I’m importing polished diamonds from overseas for my retail business — does the Kimberley Process Certificate requirement apply to me?
No, the KPC requirement specifically targets rough diamond shipments. However, you’ll still need an Import Export Code and standard customs documentation to import polished diamonds legally, even without the KPC itself.
Q3. Can a non-GJEPC-member business still get a Kimberley Process Certificate if they need one?
Yes, non-members can apply for a KPC through GJEPC’s separate non-member application process, though GJEPC membership itself remains the primary route mandated for regular rough diamond import and export activity.
Q4. Do lab-grown diamonds require the same Kimberley Process compliance as natural diamonds?
No, since lab-grown diamonds aren’t mined, they fall outside the Kimberley Process’s conflict-sourcing scope. However, clear and accurate disclosure that a stone is lab-grown rather than natural remains essential to avoid consumer misrepresentation concerns.
