Industry status to gems & jewellery sector may help SMEs to get bank loans, says Bachhraj Bamalwa of All Indian Gems & Jewellery Trade Federation

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.