The gems and jewellery sector is likely to get a separate bailout package from the government within two weeks.
Speaking to Business Standard on the sidelines of the International Brand Conclave here on Tuesday, Ashwini Kumar, minister of state for commerce and industry said, “We are exploring avenues to support the gems and jewellery sector which is one of the largest foreign exchange earners for the country and is incurring huge losses due to drop in sales. The industry is in need of government support and something will come out very soon.”
Without elaborating much on the discussion he had with the industry representatives, Kumar said the government is aware of the problems faced by th industry and will come out with some measures to address them.
However, Sanjay Kothari, ex-chairman of the Gems and Jewellery Export Promotion Council (GJEPC), was confident that the Union commerce minister Kamal Nath in his meeting with industry representatives scheduled on Wednesday may announce the package tomorrow.
Earlier, GJEPC chairman Vasant Mehta who is all set to represent gems and jewellery exports to the minister on Wednesday, also found government’s response to the Council’s suggestions favourable.
The gems and jewellery sectors in India has laid off approximately 100,000 skilled and unskilled labourers because of poor demand from the much dependent US market. The US is currently passing through economic slowdown which has impacted India’s diamond jewellery sector badly. India’s jewellery sales, constituting over 35 per cent of annual revenue, to the US declined over 20 per cent on the occasion of Christmas and New Year. Last financial year, India exported in excess of $21 billion dollar.
Moreover, the domestic demand has also declined by over 20 per cent which is evident from piling up inventories currently running for 12 months from the normal level of 3-4 months. Which means the industry will continue to sell if it does not produce anything for 12 months.
More From This Section
The gems and jewellery makers had demanded that status holders should be allowed to import gold directly and sell to exporters. If permitted, this will help alleviate the crisis of inequitable gold supply being faced currently by the industry and will also enable smaller exporters to fulfil their requirements of yellow metal in smaller lots.
Easing dollar credit lines by the Reserve Bank of India (RBI) may normalise supply of dollar finance, said Kothari. Apparently, this would also require government to release extra dollar at the lower interest rate, maximum at 1-2 per cent, to compete with global majors.