Diamond Smuggling Trade flourishes in Thailand from India – Govt gives blind eye

A recent investigation by Times of Assam has revealed that there is a big scam in the Diamond Industry of India. Diamonds worth millions of Dollars are being shipped across the borders illegally under the nose of Authorities to other South Asian Countries such as Thailand, from where it is being sold to Western Markets. This is done because Thailand is having very weak policy on Custom Duty on export of Diamonds, which is not mined in the country.

India on the other hand, who is the only producer of diamonds in South Asia has a hefty custom, excise and Tax on export of diamonds. This has resulted in millions of dollars worth black money being earned by diamond merchants who are involved in such scam. Worse, the country has lost millions of potential revenue because of the trade being done illegally.

Times of Assam have reports of such Bangkok based diamond smuggling trade being mostly originating from Mumbai & Surat of Gujarat which is one of the biggest Diamond hubs in the country. It is learnt that Diamonds are being sent across to Thailand and Hong Kong from traders using Hawala network from where these are further shipped and sold legally from Thailand & Hong Kong. A large number of Indian traders living and doing business in Bangkok are involved in this smuggling trade. Most of these Bangkok living Indian diamond traders use top get diamonds through their smuggling network in Surat. And then they sell the diamonds via open Marketplaces like eBay & Etsy. As eBay & Etsy don’t cover the policy to verify such of this information, they have nothing to do even if the items being sold via their vendors are smuggled or genuinely obtained. Those who buy such diamonds, have no interest to know how the Indian diamond reached to Thailand. The buyers are happy buying those diamonds from Thailand for too cheap price in comparison to buying from India.

Few simple points will clear entire things behind Indian diamonds being sold from Thailand.

  • Why Indian Diamonds are being sold from Thailand?
  • How the Diamonds reaches to the traders in Bangkok of Thailand?
  • Why the Indian diamonds are too cheap in Thailand than in India itself?

Risk of Terrorist Financing in addition to Money Laundering

About 2 years back, an International Report by Paris based Financial Action Task Force (FATF), a global body to set standards to combat money laundering and terrorist financing had revealed that diamond trade account of India were suspected of being used for money laundering and financing of terrorist groups. This report in fact claims that India is one of the top five countries along with Israel, Belgium, Canada and the US where trade accounts of diamond business have been used to launder illegal funds. The same report had cited example of cases where Indian importers based in Surat and Mumbai imported diamonds from Hong Kong and China by grossly overvaluing them to upto USD 544.8631 per carat!!

Is Modi Sarkar giving a blind eye to the illegal trade because they are its support base?

It is a well known fact that most of the Diamond Merchant Community are known to be pro-BJP. When 40,000 Diamond merchants had rallied behind Modi during his pre-election campaign in Mumbai (January, 2014), it had set up the tone for the national scene and inspired all other business communities. Modi had promised to them to abolish the octroi and local body tax (LBT) which was welcomed by loud applause.

It would be strange to believe that the government is not aware of such illicit trade and smuggling of worth millions of dollars are taking place from Modi’s own Gujarat and Mumbai, also a BJP Governed state. The BJP Government is to be questioned if it is letting this illegal trade run under its nose because it fears not provoking the Diamond merchant community, who have been not only moral supporters of BJP but also many of them being financial supporters. Ache Din was promised for the common men. Not for goons and smugglers.

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