The Ministry of Commerce and Industry has recommended to the Reserve Bank of India (RBI) to consider the entire export sector under priority sector lending in order to promote exports of goods and services from India, said Union Minister of Commerce and Industry Suresh Prabhu, at the 44th India Gems & Jewellery Award distribution ceremony in Mumbai on Saturday.
Currently, priority sector lending is confined only to specific sectors including agriculture under which banks are required to achieve their annual lending target.
Speaking on the occasion, Prabhu said that it is necessary to consider exports under priority sector lending in the wake of the ongoing global economic environment, adding that the government has plans to raise the economy from current $2.5 trillion, to $5 trillion and $10 trillion by 2022 and 2035 respectively.
Prabhu said that the government is committed to extending complete support to the gems and jewellery industry to achieve its fullest potential. “There are black ships every where. Sometimes, we have system failures too. But that doesn’t mean banks would stop lending to the gems and jewellery sector. We must develop a protocol for both the industry and banks to follow and must start lending to genuine players,” the minister said.
The government is in the process to form a “Domestic Council for Gold” with representatives from the government and the industry, which will act democratically to enable participants of this industry to file their complaints with them. The aim is that exports should not suffer, Prabhu said.
Speaking on the occasion, Pramod Agarwal, Chairman, Gems and Jewellery Export Promotion Council (GJEPC), said, “The government in a recent banking seminar assured the gems and jewellery industry that it will take all steps to resolve the crisis currently being faced in terms of working capital finance. But, the industry continues to face problems, which hurts the industry badly. All this is because of just a few wrongdoers who are not from our industry. This needs to be addressed at the earliest in order to achieve the export target of $60 billion set by 2022,” said Pramod
Interestingly, gems and jewellery industry witnesses an annual export worth Rs 2,400 billion. Against such a large export, the industry has accumulatively borrowed just Rs 600 billion, way below the average of other industries.
Apart from that, jewellery units in the special economic zones (SEZ) are facing issues of over-production due to the seasonal decline in demand from the domestic and overseas markets. Agarwal urged the government to make jewellery sales to domestic tariff areas (DTA) duty free. Currently, duty is applicable for import of goods. Also, there has to be an exit policy for operational units in SEZ in case their businesses decline due to unavoidable circumstances.
GJEPC has forecast 10 per cent drop in India’s gems and jewellery export for the financial year 2018-19, due to non availability of working capital loans. During FY 2017-18, total gems and jewellery exports declined by nearly nine per cent to $33 billion.
Jewellers also felt the need to raise export of silver and imitation jewellery in future to improve overall exports of gems and jewellery from India.