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Tightening the noose on jewellery exporters, the government on Wednesday reduced the working cycle for export of precious ornaments by a fourth for speedy execution of foreign orders. The Union Ministry of Finance in a notification said the period of execution of jewellery export orders should replace 90 days from the existing 120 days. This means, star trading houses need to execute export orders within 90 days from the date of their gold import. While it is not mandatory to stretch shipping of jewellery up to 90 days if ornaments are ready for exports, Indian jewellers can export even within seven days from the day of their gold import. Earlier, they used to execute orders within the stipulated limit of 120 days depending upon the requirement of overseas importers. The cut in the period of jewellery exports, popularly known as working cycle in trade parlance, is set to speed up execution of overseas orders and reduce, thereby, interest cost on Indian jewellery manufacturers in terms of both working capital and stocks held for sale in future.
But, management of inventory execution of export orders would be crucial for Indian jewellers. Normally, jewellers keep inventory for 30-45 days which goes up to even 90-120 days in a slowdown period.“We normally dispatch our consignments as soon as ornaments become ready as per importers’ order. We do not wait till the last date for execution of orders. Hence, the reduction in working cycle is not going to impact our business. But, it will certainly help manage our inventory smart thereby a significant reduction in interest costs on both working capital and stocks,” said Mehul Choksi, Managing Director, Gitanjali Gems Ltd, one of India’s largest jewellery exporters.