Surat: In the summer of 2022, the Gem and Jewelery Industry was shocked when the Gemological Institute of America (GIA) closed its Antwerp laboratory and opened a new office in Dubai. Similarly, Antwerp-based Star Gems has shifted its head office to Dubai and has held regular rough diamond tenders in the city. The UAE government had announced several incentives for ease of doing business with a single window system to move the trading hub of the gem and jewelery industry from Antwerp to Dubai. On the other hand, due to carat tax, increase in labor charges, expensive property and gas supply on the diamond industry in Antwerp, Belgium, the major gem and jewelery industries of the country, including Surat-Mumbai, have shifted 50% of their diamond offices to Dubai from 2017 to 2022.
Finished diamonds which used to go to European countries including Switzerland from Brussels are now going from Dubai. Due to the air connectivity from Dubai to many countries of the world, this trade has become easy in Dubai and Abu Dhabi. However, Surat-Mumbai diamond companies have maintained residence-cum-offices for trading and auctioning of rough diamonds. The United Arab Emirates (UAE) had a clear indication of the way forward for the diamond industry.
Dubai’s business has seen a sharp growth since the Covid-19 pandemic. According to the Dubai Multi Commodity Center (DMCC), last year’s rough exports rose 98% to $12.96 billion compared to 2020, which was 62% higher than the 2019 figure. Polished exports were up 70% year-on-year to $4.15 billion. While the DMCC has not yet published detailed data for 2022, the carat tax was introduced in 2017 for the diamond sector. But this special tax system has brought much less revenue to the Belgian federal government than expected.
The first assessment report of the tax revealed that the country’s 1,200 or so diamond traders paid 28 million euros in tax for the 2020 tax year. Which was well short of the target of 70 Euro million. The number of taxable diamond companies in Belgium fell from 1,445 in 2017 to 1,220 in 2020. This number is further reduced at the end of 2022.
Dubai is a three-hour flight from Mumbai and Tel Aviv, and there are direct flights between the nearby UAE city of Sharjah and the Indian manufacturing hub of Surat. Dubai is also well located for African mining nations and European commercial hubs. The UAE took a big step forward in 2020 to further strengthen its position, when the UAE signed a treaty with Israel that opened the door to diamond trade between the countries. Bank credit is easier to get in Dubai than in Antwerp. That reason is also important for shifting. In Corona, Antwerp and Botswana were closed due to lock down. At that time, maximum diamond auctions were held in Dubai.
The UAE government established the DMCC in 2002, which provides infrastructure for trade in a range of products from diamonds to coffee. The bourse has reached Antwerp’s decade-old trading level in 22 years. In the past two years, Angola has been exporting about 90% of its rough to the UAE, the African nation’s Minister of Mineral Resources and Petroleum Diamantino Azevedo said at the Dubai Diamond Conference.