Gems & jewellery sector cries for bailout package

February 07, 2009

Commodity Online
SURAT/MUMBAI: India’s gems and jewellery sector is reeling under severe problems due to the US economic crisis and the industry desperately needs a stimulus package.

In Surat, thousands of employees have lost jobs in jewelllery sector and may more will get pink slips in the coming days if the government fails to come up with a package for the sector.

The industry feels that the government will come up with some steps to rescue the sector in the coming interim budget to be presented in a few days’ time.

It seems that the government have realised that it cannot wait and watch for the tide to turn for this sector, which is one of the largest foreign exchange earners for the country.

According to Gems and Jewellery Export Promotion Council (GJEPC), the Union government may announce a package in the very near future.

Following the fall in exports from Surat diamond units, several jobs were lost and labourers suicides have become a common phenomenon in the city.

After the Diwali vacation several units have not opened shop till now. Durign Christmas time, exports from Surat’s diamond units crashed by around 25 per cent. In normal circumstances Christmas is the season when the industry exports maximum following demand from the US.

India has been facing poor sales both in international and domestic markets, causing export earning to drop and a cluttered pipeline.

India’s exports of polished diamonds dropped by 21 per cent in December 2008, also its domestic and international jewellery sales have shown a drop of around 20 per cent in the holiday season last year.

The sector has asked the government to allow status holders to import gold directly and sell to exporters, which will help overcome the crisis of inequitable gold supply being witnessed currently. It will also support the smaller exporters to get gold at their desired quantities. It also asked for better support from the Reserve Bank of India, in dollar credit.

The gems and jewellery sector in India has laid off approximately 100,000 skilled and unskilled labourers because of poor demand from the much dependent US market.

US is passing through economic slowdown which has impacted India’s diamond jewellery sector badly. India’s jewellery sales, constituting over 35 per cent of annual revenue, to the US declined over 20 per cent on the occasion of Christmas and New Year. Last financial year, India exported in excess of $21 billion dollar.

Moreover, the domestic demand has also declined by over 20 per cent which is evident from piling up inventories currently running for 12 months from the normal level of 3-4 months. Which means the industry will continue to sell if it does not produce anything for 12 months.

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