Mumbai: The embattled gem and jewellery industry has sought lower interest rates, monetary relief for workers and a waiver on excise duties from the upcoming interim budget, due next week.
The sector, which had been hit hard by the current global financial slowdown, wants subvention of interest rates in order to reduce its debt burden.
“We want an interest subvention of 4% to be granted until the year-end,” Sabyasachi Ray, executive director, Gem and Jewellery Export Promotion Council (GJEPC), told Reuters.
The industry currently benefits from an interest rate cut of 2% which is set to expire on 31 March.
The financial crisis has led to a liquidity crunch and delayed payments with industry players finding it difficult to repay loans.
“The bankers are not willing to experiement with funding to this industry..and any move in that direction will be highly welcome,” said Neelesh Hundekari, Principal of consulting firm A T Kearney.
Jewellery manufacturers have also sought an extension in the time limit for letters of credit (LC) needed for gold imports.
“Currently when we are importing against LC the time limit is 90 days. We want it to be extended to 360 days so that we can import cheaper raw material and tide over the crisis,” Rajesh Mehta, chairman, Rajesh Exports Ltd, said.
The sector also wants the Union government to allow gold imports through big exporters and manufacturers, instead of banks, in a bid to reduce transaction costs.
“There is stiff opposition from the Reserve Bank because they see it as currency whereas it is raw material for us,” said Ray.
While these steps would help manufacturers and exporters, the government also needs to take steps to aid workers employed by the industry, after a large number of lay-offs due to the continuing economic slowdown, industry players said.
“The sustainance of the industry is extremely important and the government should introduce some special rationing system and some kind of medical facility for the artisans,” Ray said.
The industry also wants an excise duty waiver on sales of branded jewellery within the country to help prop up domestic demand and an increase in budgetary allocation for marketing purposes.
“Middle East is a huge market we are looking at and we need the budgetary allocation to be increased in order to help us create new demand,” Ray added.
India’s gem and jewellery exports in FY09 are expected to be marginally down from $21 billion a year ago due to slower sales in the US, its biggest export market, GJEPC chairman Vasant Mehta told Reuters last month.
“The gem and jewellery industry is not asking for a package but the government must at least clear the policy requests,” Rajesh Mehta said.