Glitter on the Horizon For Indian Gems And Jewellery Sector

The Indian gems & jewellery industry has come a long way since its modest start in the 1960s. The diamond sector in India, over the last 5 decades, has evolved and today is the undisputed leaders of diamond cutting and polishing in the world. After the economic liberalisation in the 1990, the Indian jewellery exports have steadily increased and today it is one of the largest exporters of jewellery to the world.

Currently, the industry employs a workforce of 5 million people and contributes around 7% to India’s total GDP.The industry with the help of the Government has been taking proactive steps for the sustainable development of the industry here in India. Timely support from banks and financial institutions can really help the industry to meet the ever-increasing demand from the global market and take this industry back on a growth trajectory.

DOMESTIC SCENARIO

Indians consider Akshaya Tritiya to be a very auspicious day to buy gold, hence optimistic jewellers across India had stocked up inventory to cater to the expected rise in demand, causing gold imports to go up by 13%. After a slump in the industry, the retail demand has started picking up and the positive outlook on gold prices is expected to support a 10-15% growth in sales.

GLOBAL SCENARIO

India has mastered the art of processing precious and semi-precious stones and turning them into exquisite jewellery, by skills passed down over generations; making it a shining example of “Make in India.” The coloured gemstone industry in Jaipur is considered to be one of the finest cutting centres for emerald, tanzanite, morganite and many other gemstones. Jaipur alone processes more than 300 different varieties of precious and semi-precious stones.

The charm of Indian jewellery has captivated the hearts of millions around the globe. This is evident from the increase in exports the sector has seen in recent years. From exports of USD 20 billion in 2009, the industry has logged exports of over USD 40 billion in 18-19. Around 83% of India’s exported gems and jewellery reach either US, UAE or Hong Kong shores; the other leading markets being China, UK and Singapore.

US MARKET

The rising GDP growth, employment rate and private consumption expenditure in the US have contributed to the rise in India’s exports of gems and jewellery products to the US. It is believed that this momentum of US demand will continue further, and this is a good sign for Indian gems and jewellery exports.USA alone is expected to shell out $5.2 billion on the jewellery category this year, a whopping 31% increase over last year, as reported in its annual survey by NRF (National Retail Federation), with Mother’s Day estimated to see record spends and the good news is that India caters to over 19% of the US market’s jewellery demand.

GOVERNMENT BOOSTS SUPPORT TO MICRO, SMALL & MEDIUM ENTERPRISES (MSMES)

Taking note of the sector’s contribution and strengthening it further, India envisions to be world’s largest diamond and gold jewellery export hub by 2022. To achieve this milestone, the government of India has taken several steps to boost the MSME sector. The government has made improvements in the Interest Equalization Scheme to all manufacturers on Pre & Post Shipment Rupee Export Credit on which the rate of interest equalization is 5 % per annum which was earlier 3%.

The Credit Linked Capital Subsidy Scheme (CLCSS) for technology upgradation /purchase of new machine of Micro and Small enterprises with 15 per cent capital subsidy, limited to maximum of Rs 15 lakh for additional investment up to 1 Cr is provided to the eligible MSME’s for upgrading their technology with the well-established and improved technology as approved under the scheme. In the Credit Guarantee Trust Scheme for Micro and Small Enterprises (CGTMSE), the trust provides cover for credit facility up to Rs. 2 Cr which have been extended by lending institutions without any collateral security and /or third party guarantees.

A guarantee and annual service fee is charged by the CGTMSE to avail of the guarantee cover. Government is also providing funding support for cluster related programs in MSME clusters. The Prime Minister’s Employment Generation Programme Scheme provides subsidy loans for Term Loan & Working Capital for New Micro Entrepreneur. Government provides assistance of 15 – 35% subsidy, the maximum cost of the project/unit admissible under manufacturing sector is Rs.25 lakh and under business/service sector is Rs.10 lakh. Pradhan Mantri Mudra loan schemes offers Rs 50,000 under Shishu scheme, Rs 5 lakhs under Kishore scheme and Rs 5-10 lakhs under the Tarun scheme. However, Indian banks are yet to engage meaningfully with the gems and jewellery sector as the sector is not receiving adequate credit support from the bank.

Courtesy: ET