Expressing discontentment on government's plan to increase the
import duty on gold yet gain from 4% to 5%, All Indian Gems &
Jewellery Trade Federation's Chairman Bachhraj Bamalwa, said the move
will encourage smuggling activities and there are possibilities that the
income generated from these activities might be used in various illegal
activities, thereby threatening the national security as well it will
destabilize the overall economy of the country.
Besides elaborating on current status and opportunities available in
gems & jewellery sector for SMEs, he also suggested various measures
to promote country's gems and jewellery sector, in an exclusive
interview.
Please shed some light on the current status of Indian Gems
& Jewellery Industry, which has been declared as 'a thrust area of
exports' by the government?
Bachhraj Bamalwa: The global recession and economic
slowdown has its impact also on the India's gems and jewellery sector.
The Indian government is struggling with the widening trade gap. Gems
and jewellery is one of the most important sector and is the 2nd or 3rd
highest foreign exchange earner for the country. So the government has
declared it as a thrust area for export to reduce its trade gap. Despite
slowdown in USA and Europe, we hope to achieve a 10% growth in the
sector.
According to a report released by GJEPC and KPMG, the global
jewellery industry has the potential to grow to USD 280 bn by 2015. What
is your take on this?
Bachhraj Bamalwa: It is our objective to reach USD 280
billion by 2015. But considering the current economic scenario, it
looks quite difficult to achieve the target but we hope things will
prove in coming years and we will be able to close to our target.
The gems and jewellery industry in India is a fragmented one. In how much time do you think it would become organised?
Bachhraj Bamalwa: At present, only 15-20% of the
industry is organized. At GJF we are desperately trying to organize it
since past 5 years or so. It is an herculean task given the fact that
India is a huge country with varying cultures in different parts of the
country and mainly the jewellery is handcrafted and it reflects the
culture and tradition of that particular region. With little help from
the government we hope it could be organized in 20-25 years.
Kindly mention some bottlenecks plaguing the industry?
Bachhraj Bamalwa: Lack of formal education for
artisans, lack of infrastructure in manufacturing, poor working
environments for artisans, the negative approach of govt towards the
sector.
What are the growth opportunities for the SMEs available in the gems and jewellery industry?
Bachhraj Bamalwa: The sector is capital intensive
requiring comparatively large capital with low margin. The sector lacks
industry status which is a resistance in getting bank loans. But the
sector holds huge potential and SMEs have huge scope and have many
opportunities in near future.
Signalling a new setback for the gems & jewellery industry,
the government is planning to raise the import duty on gold from 4% to
5%. According to you, how the move will suppress the industry's growth?
Bachhraj Bamalwa: Import duty on gold was increased
from 1% to 4% prior to and in the budget 2012-13.The smuggling of gold
was practically nil before this period but have increased ever since the
import duty has been increased. Gold worth Rs 942 crores was seized
during a brief period of three months Further increase in the import
duty will encourage smuggling and the income generated from these
activities might be used in various illegal activities, threatening the
national security as well it will destabilize the overall economy of the
country. Further, despite a steep hike in the import duty approximately
600 tonnes of god was imported into the country during the 1ST three
quarters of 2012-2013 and the country’s trade gap has also not reduced
and the governments foreign exchange reserve has also came down.
A ban should also be imposed on banks selling gold coins. In most cases
the banks forcibly sells gold coins to its high net worth clients and
the gold keeps on lying idle with the consumers for years. Coins are not
same as jewellery and hence coin sales are similar to investment
options and consumption is recommended to be reduced.
What measures should government, in terms of pragmatic policies, to sustain global competition?
Bachhraj Bamalwa: Setting up jewellery parks in major manufacturing areas like West Bengal, Kerala, Rajasthan, Gujarat etc.
The government should also encourage, enact and speak positively on
gems and jwellery sector. The sector is already facing the problem of
sluggish economy and the skilled artisans are fleeing from the industry.
I also request the government to ban trade in ETF, e-gold, and Gold
mutual Funds which are backed by physical gold till such time the
current account deficit of the country is reduced to a satisfactory
level.
What is the outlook for the sector in the next 6 months?
Bachhraj Bamalwa: With wedding season in place the
next 6 months looks good provided the govt do not shock us with some
negative news in budget 2013-14.
What are the key priorities of GJF. Please share your roadmap for the remaining quarter of the current fiscal (2012-13).
Bachhraj Bamalwa: Liaison with the government for some
pending issues, converting GJF into a National Council under ministry
of commerce, creating awareness among smaller jewellers to be organized,
creating infrastructure for the formal training of Artisans.
