At a recent meeting with the Finance Minister Smt. Nirmala Sitharaman, GJEPC has urged to consider granting Priority Sector status to the gem and jewellery industry.
The industry contributes significantly to the country’s GDP and 13.75% to merchandise exports. It’s a labour-intensive industry with more than 5 million workers across India. Around 90% of the gem and jewellery sector consists of micro, small and medium manufacturers enterprises (MSME) units.
With gems and jewellery being an MSME-dominated export activity that has a huge potential for employment generation, the GJEPC is of the view that the sector deserves improved focus and facilitation. The credit lines extended to exporters and MSME borrowers are classified under priority sector lending, but with a certain cap on credit limit for domestic lenders.
Following recent modifications in the MSME definition with special dispensation in turnover criterion for export sales, and with this being a high value business, the GJEPC felt the need to take up the issue once again with concerned authorities though the credit limit cap for the export finance facility has been enhanced from Rs.25 crore to Rs.40 crore in September 2019.
The gems and jewellery sector has access to about Rs. 68,000-70,000 crore of formal credit, which works out to approximately 0.68% of total bank credit (RBI data December 2019), which is miniscule in comparison with the socio-economic contributions this sector has made.
Consequently, the GJEPC has urged the Government to grant priority sector status to all forms of credit lines extended to the industry. This will ensure smoother flow and cheaper credit to the sector, provide support to achieving global competitiveness, and move India closer to becoming the undisputed leader in the gems and jewellery business.
This may facilitate more global business converging into the country thereby increasing employment and exports. The sector’s primary commodities, diamonds and gold, also act as a natural hedge against the depreciating rupee due to its export potential.
Photo caption: Finance Minister Smt. Nirmala Sitharaman