GJEPC’s Annual Banking Summit 2019 Part I: Assessing the Achievements of the Year Gone By and the Way Forward

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GJEPC’s Annual Banking Summit 2019

The Gem & Jewellery Export Promotion Council (GJEPC) held the fourth edition of the annual Banking Summit on July 31, 2019.

In his welcome address to a hall packed to capacity, and including several senior executives from the international diamond sector, GJEPC Chairman Pramod Kumar Agrawal presented an outline of the current status of the gems and jewellery industry and the various steps the Council was taking to taking the industry to the next level.

The Chairman thanked the Government and the Minister for Commerce & Industry, as well as Minister for Finance for the support given at various stages to this industry. The recent clarification that GST would not be applicable on re-import of goods carried out of the country for exhibition purposes; and the implementation of separate HS Codes for synthetic diamonds both rough and polished (with India being an early adopter of the same) and other synthetic gemstones. These measures would go some way in “Ease of Doing Business”, he said.

“The gems and jewellery industry has developed over the past five decades to achieve about US$ 40 billion of exports annually,” Agrawal said. “This industry contributes 7% to the country’s GDP, 12% to India’s total merchandise exports. We now have a Vision 2022 by which date we hope to take the exports of the g&j sector to US$ 75 billion and increase our share in merchandise exports of the country to 15%.”

He also enumerated various steps which were being taken by the Council to help achieve this vision including setting up Common Facility Centres (CFCs); undertaking cluster mapping to plot developmental plans for MSMEs; working towards setting up of the first Jewellery Park in Mumbai, and a Gem Bourse in Jaipur; working towards skilling and upskilling the manpower for the industry; and some welfare measures like the Swasthya Ratna and the Parichay Card.

Agrawal also spoke of the need for generic promotions, especially given the weakened market scenario in the last few quarters. For this he said, the GJEPC has already held meetings with De Beers as well as ALROSA, asking the latter to step up their investment for promotions. The Council is also contributing to the promotional efforts.

Focussing on the lack of adequate financing for the sector, particularly the MSMEs of the industry, he said: “I would like to appeal to all stakeholders to come forward to finance this sector which is the leading diamond manufacturing centre and perhaps the largest jewellery processing centre as well – especially at a time when we aim to become a leading supplier of jewellery to the world.”

Ms. Rupa Dutta, Economic Adviser to the Ministry of Commerce & Industry (MoC&I), Government of India (GoI) addressing the gathering stated categorically: “Finance is a vital component for all industries and especially so for the gem and jewellery sector which has exports of US$ 40 billion.”

She added: “The gems and jewellery industry plays a critical role and hence the Government has promoted it as a focus area to ensure that it gets adequate financing”

Ms Dutta said that the international economic situation has had an impact on the general situation in India; and the banks are getting cautious. Also, banks are reluctant to lend to the MSMEs and the credit crunch is impacting the overall performance of the g&j industry.

While on the one hand she called upon financial institutions to come forward to finance the sector, she stressed that it was very important for the industry to build the trust factor and take measures to ensure transparent functioning.

She hinted that the Government, with the Minister MoC&I taking personal interest, was coming up with schemes in the next month or two which would make finance more easily available to the export sector in general, and the g&j industry would also benefit as a result. But, she said, she was not in a position to reveal anything further, as the policy had to go through due process before any announcements could be made.

Following the last Banking Summit, and as a result of the discussions that emerged there, a Co-ordination Committee (CoC) was set up to go into the nitty gritty of the various challenges and issues, in an effort to find solutions and also to create a greater understanding amongst all the stakeholders with regards to finance and the g & j sector.

P. N. Prasad, Chairman of the CoC and Deputy Managing Director, SBI, presented the first report of the workings of the Committee. He said that some progress has been made in the last months in many areas. He spoke about the need for information exchange between stakeholders and the need for conducting due diligence on the part of the bankers.

“The main problem we noticed was a lack of a uniform approach by all banks towards financing the sector,” Prasad noted. “We have tried to formulate a uniform approach on security, margin and other requirements.” Some progress had been made towards this, he reported.

The other area was the “rigid” ECGC approach to credit lines. He said the Committee had been interacting with ECGC with a view to finding an amenable method of working and fulfilling the requirements to resolve the issue. “If risk can be mitigated, credit flow will improve,” he said. And also that they were aiming to create a separate policy for MSMEs in this matter.

Taking the GJEPC Chairman’s thoughts ahead on the financing front, Sanju Kothari, Convener of the Banking, Insurance and Taxation Sub-Committee (BITC) of the GJEPC, made a presentation with a detailed analysis of the current situation and some pointers on the way ahead.

Titled “Diamond & Jewellery Financing 2019: Redefining Business Strategy”, after initially setting the stage by providing information on trade highlights and trade vision and the industry scenario and general trade initiatives (touched upon by the GJEPC Chairman earlier), the presentation went on to analyse the achievements in the past year on the White Paper 2018 submitted at the Banking Summit last year.

In the White Paper, five challenges had been outlined. In the presentation yesterday, these were juxtaposed with action taken. The five areas of concern and what has been done are:

Credit Limits: Cost of credit, collateral security, gold card scheme, dollarization of limits etc. – Formation of the CoC to address trade-related concerns

Compliance: Introduction of the MyKYCBank to address identity and compliance risk – Implementation and registration of 3300+ members

Valuation of Stock: Addressing complexity and accuracy in stock valuation — Formation of a GJEPC recommended and customs approved stock valuers panel

Insurance: Non-availability of adequate insurance cover, increase in cost of premiums – Working on an insurance policy for MSMEs (Expected soon)

General Trade Welfare: Ease of doing business, tax related matters, arbitration redressal etc. – Resolved several GST related issues and formation of an arbitration committee.

Kothari went on to highlight another issue, that of non-implementation at the operational level of RBI and IBA circulars by which banks were to re-allocate limit towards export credit in foreign currency.

He also touched upon the achievements of the CoC and the various challenges still confronting the trade along with suggestions to solve them and suggestions for each stakeholder (industry, banks, government and government bodies for the way forward.

To view complete presentation on “Diamond & Jewellery Financing 2019: Redefining Business Strategy”

https://gjepc.org/pdf/Diamond-Jewellery-Financing-2019.pdf

Note: After the inaugural session, the Summit continued with a series of panel discussions on different themes. A report of these sessions will appear on www.gjepc.org tomorrow.

Pic caption: Seen at the Banking Summit 2019 (from left: Sabyasachi Ray, ED GJEPC; V.G. Kannan, Chief Executive, IBA; Colin Shah, Vice Chairman GJEPC; Ms. Rupa Dutta, Economic Adviser, MoC&I, GoI; Pramod Kumar Agrawal GJEPC Chairman; P. N. Prasad, Chairman CoC & Deputy Managing Director SBI; and Sanju Kothari, Convener BITC, GJEPC

News Source: gjepc

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Disclaimer: This information has been collected through secondary research and TJM Media Pvt Ltd. is not responsible for any errors in the same.

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