The gems and jewellery export sector is seeing signs of improved prospects with the US market turning positive. In financial year 2018-19, exports were up marginally by a little over three per cent, even as shipments to the United States fell in the last two years by nearly a fifth, from 48 per cent to 37.4 per cent. Industry leaders hope a revival in the US market will be a positive for overall jewellery exports from India.
Sources said several representations made to the Indian Banks’ Association and State Bank of India should bring forth some relaxation for financing exporters, with the environment having stabilised.
In February 2018, when Punjab National Bank was hit with a fraud of around $2 billion, the resulting ban on the much-abused letters of undertaking and several other tight measures were taken. These have begun yielding results and frauds have been contained.
Colin Shah, Vice Chairman, Gems & Jewellery Exports Promotion Council (GJEPC) said, “The banking sector's exposure to the gems and jewellery sector is mere 2.5-3 per cent of the overall requirement for the sector. The industry urges the banks to relax some norms for working capital lending to the sector. Time has come that the banking sector should look at the gems and jewellery sector in a serious manner.”
Banks have tightened credit flow to the entire gems and jewellery sector for over a year now, limiting its growth.
Signs of improved prospects in America have also been seen in US retail sales, which posted their largest gain since September as the economic and financial outlook stabilized, according to the National Retail Federation (NRF). US consumers are expected to spend 13 per cent more on jewellery this Mother’s Day, according to the National Retail Federation (NRF).
Americans will shell out $5.2 billion on the category this year, up from $4.6 billion in 2018, the federation reported last week in its annual survey. The dollar increase for jewellery sales represents 31 per cent of the total expected growth in Mother’s Day sales over last year. Overall spending for Mother’s Day, which falls on May 12, is predicted to increase eight per cent to a record $25 billion.
India catered to over 16 per cent of the US gems and jewellery demand in FY19. Exports to that country have grown 3.97 per cent to $10.476 billion in FY2018-19 from $10.1 billion in FY 2017-18.
Exporters are hoping the momentum in the American market will continue. The council has also taken several steps to make the business transparent which banks have noted, said that exporter who attended a recent meeting with banks of relaxing credit flow to the industry.