The Directorate General of Foreign Trade (DGFT), Ministry of Commerce and Industry, has notified an amendment to Paragraph 4.49 of the Foreign Trade Policy (FTP), 2023, relating to the import, auction, sale and re-export of rough diamonds through Special Notified Zones (SNZs) in India.
The amendment has been issued vide Notification No. 42/2026-27 dated October 9, 2026, in exercise of powers conferred under Section 3 read with Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, read with Paragraph 1.02 of FTP 2023, as amended from time to time. The revised provisions have come into force with immediate effect.
Foreign Entities Permitted to Undertake Rough Diamond Trading Activities in SNZs
Under the amended Paragraph 4.49, eligible foreign entities are permitted to undertake the import of rough diamonds and their auction, sale and re-export, as the case may be, on a consignment or outright basis through Special Notified Zones administered by SNZ operators under the supervision of Customs authorities.
The revised provision provides an express framework for eligible foreign entities to participate in rough diamond trading activities in India through designated SNZ facilities.
Eligibility Expanded to Diamond Mining Companies, Brokers and Auction Entities
A significant feature of the amendment is the express identification of categories of foreign entities eligible to undertake permitted activities in Special Notified Zones.
The revised Paragraph 4.49 covers foreign companies engaged in diamond mining, sight holders of such diamond mining companies, and brokers, aggregators or tender and auction entities connected with the sale of rough diamonds, as covered under Entry 13F of Schedule IV of the Income-tax Act, 2025, subject to the conditions applicable thereunder.
The amendment thereby links the eligibility of foreign entities operating through SNZs with the corresponding provisions of the Income-tax Act, 2025.
Earlier Framework Linked to RBI Notification
Prior to the amendment, Paragraph 4.49 permitted the import, auction/sale and re-export of rough diamonds by entities notified under RBI Notification No. 116 dated April 1, 2014, as amended from time to time, on a consignment or outright basis through Special Notified Zones.
The revised provision replaces the earlier RBI-notification-based eligibility reference with an express description of eligible foreign entities linked to Entry 13F of Schedule IV of the Income-tax Act, 2025.
Customs Supervision and CBIC Procedures to Continue
The DGFT has clarified that the permitted activities shall continue to be undertaken through Special Notified Zones administered by their respective operators under Customs supervision.
Further, the procedure governing the import, auction/sale and re-export of unsold rough diamonds shall continue to be specified by the Central Board of Indirect Taxes and Customs (CBIC) from time to time.
Accordingly, eligible foreign entities and SNZ operators will remain subject to the applicable Customs procedures and regulatory requirements.
Significance for India’s Diamond Trade and Export Sector
The amendment is an important regulatory development for India’s diamond trading sector, particularly for foreign diamond mining companies and entities involved in the international marketing, tendering, auctioning and sale of rough diamonds.
By expressly recognising eligible categories of foreign entities under the FTP framework, the revised provisions provide greater regulatory clarity regarding participation in rough diamond trading activities through India’s Special Notified Zones.
The amendment may also facilitate participation by overseas diamond suppliers and strengthen the role of Indian SNZs as platforms for international rough diamond trading, subject to applicable legal and procedural requirements.
Effect of the Notification
As expressly stated in Notification No. 42/2026-27 dated October 9, 2026, Paragraph 4.49 of FTP 2023 relating to Special Notified Zones has been amended to enable eligible foreign entities covered under Entry 13F of Schedule IV of the Income-tax Act, 2025 to undertake permitted activities.
The amendment takes effect immediately and has been issued with the approval of the Minister of Commerce and Industry.
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/10/Notification-No.-42.pdf-Hindi.pdf
