The gems and jewellery industry has faced a huge setback after the outbreak of coronavirus (Covid-19) disease and the subsequent national lockdown with exports in March declining by half according to initial estimated of the Gem and Jewellery Export Promotion Council.
To be sure, the sector had been ailing for the past few quarters because of the impact of the US-China trade war, followed by economic slowdown and riots in Hong Kong.
Total gross exports, including cur and polished diamonds, in March are estimated to have slipped to $1.5 billion against $3.44 billion a year ago, a decline of 56.4 per cent.
As a result, total export in financial year 2019-20 (FY20) is expected to be $35.14 billion, a fall of 11.33 per cent, compared with a year ago.
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Sources said the Surat diamond processing industry have had to shut operations, and as a result are sitting on unsold inventory processed in the past few weeks, with no prospect of demand rising in the near future as lockdown-like conditions prevailed across major global markets.
At present, consumers across the globe have cut discretionary spending, impacting purchases of diamond jewellery. However, when the situation normalises, the bigger issue will the access to finance.
Colin Shah, vice-chairman of the Gem and Jewellery Export Promotion Council, said, “We plead with the Reserve Bank of India to make special announcements for relaxing the interest rates and margins applicable on export finance, provide interest subvention across all sectors for traders and manufacturers up to 5 per cent, permit extension of packing credits and export bills for a period of 90 to 180 days, depending on business cycle of the industry, without impacting the status of the account”.
Shah said, “Reassessment of facility to tide over the situation will take time... Therefore, this injection of additional funding should be given by banks within seven days of application. Only then will it help. If they take 90 days, then the whole purpose will be defeated”.
To be sure, the sector had been ailing for the past few quarters because of the impact of the US-China trade war, followed by economic slowdown and riots in Hong Kong.
Total gross exports, including cur and polished diamonds, in March are estimated to have slipped to $1.5 billion against $3.44 billion a year ago, a decline of 56.4 per cent.
As a result, total export in financial year 2019-20 (FY20) is expected to be $35.14 billion, a fall of 11.33 per cent, compared with a year ago.
chart
Sources said the Surat diamond processing industry have had to shut operations, and as a result are sitting on unsold inventory processed in the past few weeks, with no prospect of demand rising in the near future as lockdown-like conditions prevailed across major global markets.
At present, consumers across the globe have cut discretionary spending, impacting purchases of diamond jewellery. However, when the situation normalises, the bigger issue will the access to finance.
Colin Shah, vice-chairman of the Gem and Jewellery Export Promotion Council, said, “We plead with the Reserve Bank of India to make special announcements for relaxing the interest rates and margins applicable on export finance, provide interest subvention across all sectors for traders and manufacturers up to 5 per cent, permit extension of packing credits and export bills for a period of 90 to 180 days, depending on business cycle of the industry, without impacting the status of the account”.
Shah said, “Reassessment of facility to tide over the situation will take time... Therefore, this injection of additional funding should be given by banks within seven days of application. Only then will it help. If they take 90 days, then the whole purpose will be defeated”.
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