Central Consumer Protection Authority Hosts Stakeholder Consultation to draft Guideline for Protection of Consumer Interest in Diamond Sector

Central Consumer Protection Authority Hosts Stakeholder Consultation to draft Guideline for Protection of Consumer Interest in Diamond Sector

21st November 2024

The Central Consumer Protection Authority, organized a Stakeholder Consultation on Consumer Protection in the Diamond Sector to deliberate on the use of appropriate terminology for diamonds. The consultation, chaired by Smt. Nidhi Khare, Chief Commissioner, Central Consumer Protection Authority (CCPA), brought together key industry stakeholders and experts

Addressing Consumer Concerns

The meeting addressed critical concerns regarding the lack of standardized terminology and inadequate disclosure practices in the diamond sector. These gaps have resulted in consumer confusion and misleading practices, especially concerning the differentiation between natural diamonds and lab-grown diamonds.

Discussion on Legal and Regulatory Frameworks

During the consultation, the broad key aspects and prevailing Legal and Regulatory frameworks were discussed in detail.

Standardized Measurements for Diamonds

The Legal Metrology Act, 2009, under Section 12, provides the unit of mass for diamonds, pearls, and precious stones as the carat (symbol: c), equivalent to 200 milligrams or one five-thousandth of a kilogram, ensuring standardized measurements for consistency in commercial transactions across the diamond industry.

Mandates on Diamond Terminology by BIS

The Bureau of Indian Standards (BIS) Standard IS 15766:2007 mandates that the term “diamond” alone must exclusively refer to natural diamonds. Synthetic diamonds cannot be labeled as “diamond” without qualification and must be explicitly referred to as “synthetic diamonds,” irrespective of the production method or material used. To maintain market clarity, synthetic diamonds are also prohibited from being graded alongside natural diamonds.

Provisions under the Consumer Protection Act, 2019

Under the Consumer Protection Act, 2019, a robust legal framework is provided to safeguard consumer interests by preventing unfair trade practices and ensuring transparent labeling in the diamond industry, prohibiting misleading descriptions or omissions that may confuse consumers.

CBIC Circular Reinforcing Transparency

Further, the Central Board in Direct Taxes and Custom (CBIC) reinforced these measures through Circular No. 21/2024, dated October 30, 2024. This mandates the explicit declaration of whether a diamond is natural or lab-grown, and if lab-grown, the production method—Chemical Vapor Deposition (CVD), High Pressure High Temperature (HPHT), or others—must be specified to ensure transparency and accountability in the diamond sector.

Proposals for Ethical Marketing Practices

Industry consensus emphasized the need for ethical marketing practices and consistent terminology to enhance consumer protection. Comprehensive guidelines were proposed to mandate:

• Explicit labeling and certification of all diamonds, specifying their origin and production method.
• Prohibition of misleading terms like “natural” or “genuine” for lab-grown products.
• Accreditation systems to regulate and standardize diamond testing laboratories, curbing the rise of unregulated entities.

Toward a Transparent and Consumer-Centric Diamond Market

The consultation was a significant step toward building a transparent and consumer-centric diamond market. The Central Consumer Protection Authority (CCPA) will soon release a robust framework to ensure transparency, accountability, and consumer protection across the diamond industry.