The Gems & Jewellery Export Promotion Council of India made an appeal to the Indian government to provide “urgent and immediate interim relief” to prevent the loss of 25 to 30 percent of its labor force due to “recession enforced layoffs.”
GJEPC, at a Dec. 16 press conference, requested that the Indian government provide a combination of credit relief, direct funding, and regulatory changes to help ease the industry from the drastic decline of gems and jewelry exports due to the U.S. recession and the turmoil in the worldwide financial markets.
“Already the 20 Diwali holidays, which are given to the workers, has been extended to an unprecedented 40 days, with no certainty of when the total workforce can actually be called back,” said Vasant Mehta, GJEPC chairman. “1.3 million people and their families depend upon our sector for their livelihood and while we are making every attempt to protect them, it will only be possible if the government supports our endeavors.”
The gem and jewelry industry in India has already cut back production by over 25 percent and in GJEPC called for a moratorium on the purchase of rough diamonds for processing and production for a month, beginning Nov. 25. The main reason for the steep decline, according to GJEPC officials is the recession in the U.S., India’s is the largest market for its jewelry industry in India (accounting for 30 to 35 percent of India’s diamond and jewelry exports).
Overall exports of gems & jewelry are down 34.25 percent, as of Nov. 8, with December following the same trend, GJEPC said. At the manufacturing level, exports of cut & polished diamonds are down more than 20 percent, compared to the same period last year. In addition, there has been an average reduction of more than 20 percent in orders from April through October.
“The current economic situation, has pushed the industry into a corner, forcing it to seek interim relief from the government,” Mehta said. “The banking measures being sought will help ease the pressures for exporters. Lesser cost of capital and increased time limits, will help us generate fresh orders by diversifying into different markets. In the long run this will create newer markets and more demand for the products, while the economy recovers from its current downturn.”
GJEPC has requested that the India government do the following:
* Allow status holders to import directly and sell gold to exporters. This will help alleviate the crisis of inequitable gold supply being faced by the industry, and will also enable smaller exporters to fulfill their requirements of gold in smaller lots.
* Increase rupee interest subvention from 2 percent to 4 percent and extend this facility to dollar credit.
* Have the Reserve Bank of India, the country’s central bank, provide adequate dollar credit lines so the industry continues to get uninterrupted supply of dollars.
* To release dollars from the India government’s dollar reserve for credit to the industry.
* Encourage banks to continue giving credit on the limits sanctioned to each individual exporter on absolute dollar terms rather than on fluctuating exchange rates.
* Discontinue the current practice of declaring an exporter’s account as a Non Performing Asset due to delayed collections.
* Grant of Duty Credit Scrip equivalent to 2.5 percent of free-on-board value of 2007 exports to all countries.
“It is with four decades of efforts that India has managed to become a world leader in processing of diamonds,” Mehta said. “Our biggest concern is the possibility of losing this preeminent position if these measures are not implemented immediately.”
Caption: GJEPC chairman Vasant Mehta (at podium) and other GJEPC members making their plea for government intervention.