(IDEX Online) - India's Gem & Jewellery Export Promotion Council (GJEPC) has said that the 10% decline in bank finance to the gem and jewelry sector over the last few months will adversely impact exports from the industry this year.
The annual decline in total exports could be as much as 10%, the Council said, adding that exports in the April-June 2018 quarter stood at US$10.1 billion as compared to US$11.1 billion in the same period last year, marking a decline of 8.8%.
Describing the situation as a "crisis of sorts", GJEPC Chairman Pramod Agrawal said that "the Council is taking all efforts to self-regulate and instill confidence amongst key stakeholders through a slew of reforms".
The statement is reproduced below:
The Gem & Jewellery Export Promotion Council (GJEPC), the apex body for the gem and jewelry trade in India, set up by the Ministry of Commerce and Industry, today stated that there has been at least 10 percent decline in bank finance to the gem and jewelry sector which is going to adversely impact exports out of the country. This also implies that gem & jewelry exports for the FY 2018-19 will see a drastic drop of 10% as well according to GJEPC.
According to the data released by GJEPC, the exports of gem and jewelry from India declined to 8.84 percent during April to June 2018 to USD 10.1 billion compared to USD 11.1 billion in the same period last year. The Council undertook proactive initiatives in recent past such as MyKYC bank initiative, a "white paper" to mitigate the financing risks and boosting transparency into the credit mechanism playing a critical role in the trade.
Pramod Agrawal, Chairman, GJEPC said that "The Council is taking all efforts to self-regulate and instill confidence amongst key stakeholders through a slew of reforms. However, the industry is witnessing a crisis of sorts as the banks have curtailed lending to the traders and demanding collateral security and extensive documentation. In such a scenario, Gem & Jewelry Industry, a US$41 billion export industry will see a gradual decline in FY 2018-19. We are hoping that the government will intervene and bring some relief to the ailing industry that contributes 7% to the GDP. It is time to bring back Interest subvention scheme to help in ease of doing business."
"Bank finance is the life line of the industry and any decrease would see a decrease in gem & jewelry exports as well. After all the efforts to make sure genuine players continue to get the finance, Banks are insisting for discounting that all customer invoices should be through the bank which is seriously hampering relationships with customers as well as cash flow on a daily basis. Banks have also taken away all benefits on assessment fees due to which cost of finance has gone up," said Colin Shah, Vice Chairman. "Post the recent incident, banks and other financial institutions have become stringent and are insisting on a much higher collateral security against bank finance."