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GJEPC May Transfer Chinese Business to Hong Kong

The Gems & Jewellery Export Promotion Council (GJEPC) may pull its diamond cutting and polishing business out of China, Commodity Online reported Saturday. The news comes after last week's arrest of 21 Indian diamond merchants in Shenzhen on smuggling charges.

The smuggling ring allegedly sourced their diamonds from Hong Kong, then hired Indians to smuggle them into Shenzhen before distributing them to factories, which then sold them as legal goods. Arrests were made after a two-month long investigation by Custom officials in Shenzhen.

A decision to relocate to the GJEPC to relocate its activities to Hong Kong by could prove profitable. Diamond imports into China come with a 4 percent duty for members of the Shanghai Diamond Exchange and 18 percent for non-members, while diamond imports into Hong Kong have no such duty attached to them.

GJEPC Chairman Vasant Mehta told India's business daily Business Standard that if last week's arrests were "a retaliatory action" for India's arrest of three Chinese engineers connected to an industrial accident last September than the GJEPC would "have to consider pulling out from China."