The Indian government has tabled a bill granting a 15-year tax holiday for foreign companies selling rough diamonds in special notified zones (SNZs).

The exemption would apply to a range of overseas-based rough sellers, including miners, brokers and aggregators, according to the bill, which the government presented to parliament on Tuesday. It would also apply to operators of tenders and auctions, as well as sightholders – the term for De Beers’ contract customers, which often resell their rough.

The move will help India – already the world’s dominant diamond-manufacturing hub – compete with other trading centers. At present, suppliers frequently display their rough in India, but ship it to Dubai or Antwerp for sale.

Under the proposed changes, proceeds from rough sales will not count towards the total income for a tax year used to calculate a company’s tax obligation, the bill explained. As a condition, the company must carry out the sale in an SNZ, such as the ones inside Mumbai’s Bharat Diamond Bourse (BDB) and the Surat Diamond Bourse (SDB), and must submit certain information when asked.

The move “streamlines the operations and reduces unnecessary movement of rough,” said India-based industry analyst Pranay Narvekar, who owns Pharos Beam Consulting.

The rule, if approved, will go into effect on October 1 of this year and end on March 31, 2041. The bill has been “introduced” in Lok Sabha, the country’s lower house, but still needs to be ratified.

Corporate income tax can be up to 33% on profit after surcharges, said Sabyasachi Ray, executive director of the Gem and Jewellery Export Promotion Council (GJEPC).

The GJEPC had long been requesting this change “to ensure small-scale diamond manufacturers can directly buy rough diamonds from diamond-mining companies, auctioneers [and] traders,” Ray added. “We welcome such [a] step and are very confident that, due to this measure, India will emerge as a powerhouse in rough-diamond trading.”

The latest concession follows India’s introduction of a “safe harbor” rule two years ago. That system set a fixed profit margin of 4% for overseas mining companies selling unsorted rough diamonds in SNZs, Ray explained. This essentially capped income tax on these sales at around 1.25% of revenue, since the government only collects on the 4% of revenue assumed to be profit, even if the sales were actually more profitable, he added. The present reforms, as well as reducing the tax bill, expand the concessions beyond mining companies to other foreign sellers.

The proposal is part of a wider bill to revamp India’s tax system and support sectors struggling with global challenges.