Vice-Chairman | Mines to Market

Jewellers seek relief from financial stress. Jewellery manufacturers and retailers have urged the government to extend immediate financial assistance and banking related relief for the stressed gem, jewellery and allied businesses post the devastating second wave of the global pandemic Covid-19. A letter addressing to the Union Finance Minister (FM) and the Reserve Bank of India (RBI), jewellers' representative body All India Gem and Jewellery Domestic Council (GJC), which represents lakhs of small and MSME jewellers and allied trade constituents, said, "As several jewellers affected by multiple lockdowns were finding it difficult to repay loans, an extension of the moratorium on interest payments for the stressed gem & jewellery sector for a period of six months is needed." GJC has urged FM and RBI to extend certain measures - Resolution Framework 2 and Resolution for MSMEs – to alleviate uncertainties and stress on the jewellery business (which comprises mostly small businesses and MSMEs). The council cited that the K V Kamath chaired Expert Committee constituted by RBI (7th August 2020) had included the gem and jewellery sector amongst the stressed industries in their report submitted on 4th September 2020. GJC urged the Government for assistance to restructure loans given to the gem and jewellery businesses by offering a one-time subsidy. The council requested the government to increase the tenure of Gold Metal Loans (GML) from 180 days to 270 (as was done during the last year 2020) or 360 days. The gem and jewellery sector is the most affected industry with the potential loss of job of unskilled & poor goldsmiths. The industry is burdened by huge inventory costs, higher fixed overheads including interest costs and rentals, among others. "For almost two months of 2021, the domestic gems and jewellery industry and their stores/ shops were shut even while key festivals such as Gudi Padwa and Akshaya Tritiya was celebrated in lockdown for the second year in a row. The government allowed weddings during lockdowns, but jewellery businesses do not fall under the ‘Essential’ category. Even after the slow opening of the States, the next few months will be difficult and challenging for the industry, which offers livelihood to lakhs of people and their families," said Ashish Pethe, Chairman, GJC. "We request the Government to consider our plea of offering financial aid, assistance and relief as has been given to several small businesses and MSMEs in other sectors. We also seek that the benefits that were given in 2020 should be extended even in 2021,” he added. Saiyam Mehra, Vice Chairman, GJC, quipped, “We urge Government to allow a moratorium on interest for six months to the stressed gem and jewellery sector, and allow six months to pay the accumulated interest in equated monthly instalments. The government has extended ECGLS 3.0 to the Hospitality, Travel and Tourism sector, sighting the financial stress in the sector due to Covid; and we seek the same facility to be extended to jewellers under CCEL 2.0. This can be done by extending credit up to 40% of the total outstanding and should be made available to all borrowers, who have an Rs. 500 crore limit and even if the overdue for 60 days or less. We feel that it will be appropriate for financiers to restructure the loans to the gem and jewellery sector by offering a one-time subsidy.” Talking about Gold Metal Loan (GML), Pethe added, “GML is currently offered for 180 days, which should be extended to 270 days as offered to the exporters. RBI had allowed Banks to extend GML validity to 270 days during lockdown during 2020. We request you to extend the GML tenure/validity to 270 days this time around too. Internationally GML is offered a tenure of 1 to 2 years. We request you to increase the tenure of GML from 180 days to 270 or 360 days. This will benefit the government as the CAD position will improve with a substantial reduction in gold imports.” The council sought an extension of the moratorium on Interest payment for a period of six months on all working capital, term loan and other credit facility availed by the Gem and Jewellery Sector, as permitted earlier under RBI Notifications RBI/2019-20/186 dt.27.03.2020 and RBI/2019-20/245 dt.23.05.2020. GJC said that the trade suffering a huge loss of profit due to huge fixed overheads like bank interest, salary, rent, staff welfare, security. As the festival season was approaching the Jewellers had enhanced their inventory and used working capital to procure jewellery for festive and wedding season, just before the lockdown was announced. It is appropriate to extend an interest moratorium for a period of 6 months considering that interest on capital is the major expense in the business of gems and jewellery. Banks should not focus on their profitability in this pandemic period and ensure support to the stressed gem and jewellery sector by bringing down the interest rate to REPO/EBLR level, GJC said. Apart from that GJC said that Vide the RBI Circular no. RBI/2021-22/32 Dt. 05-05-2021, the facilities of existing loans to MSMEs classified as 'standard' should be extended & may be restructured without a downgrade in the asset classification or Credit Rating, subject to the following conditions: The aggregate exposure, including non-fund-based facilities, of banks and NBFCs to the borrower does not exceed ₹25 crores as on 1st March 2021. The facility should be extended to borrowers, whose aggregate exposure does not exceed Rs. 100 crores. GJC urged the Government to provide a one-time Subsidy in the interest amount to Jewellers, which has been paid or as payable for FY 20-21 and FY 21-22. This restructuring is the need of the hour as the gems and jewellery industry is a capital-intensive industry resulting in most jewellers having huge operational costs including interest on capital. GJC stated that jewellers have been paying interest for many years to banks and maintaining a good credit standing in their accounts. Due to COVID-19 lockdowns 1 & 2, they find it difficult to meet the capital loss in this sector.

Tag: Vice-Chairman

Most Read

Angola Records a Historic 70% Growth in Diamond Sales Volume in 2025

HRD Antwerp Launches Globally Recognised Diamond, Gemmology and Jewellery Education Programmes in India

Antwerp Diamond Federation Welcomes EU Decision Not to Impose Import Tariffs on U.S. Diamonds

Pralhad Joshi Union Minister of Consumer Affairs, Food & Public Distribution and Minister of New & Renewable energy, at GJS to celebrate 25 years...

EDITOR PICKS

Angola Records a Historic 70% Growth in Diamond Sales Volume in 2025

HRD Antwerp Launches Globally Recognised Diamond, Gemmology and Jewellery Education Programmes in India

Antwerp Diamond Federation Welcomes EU Decision Not to Impose Import Tariffs on U.S. Diamonds

POPULAR POSTS

Angola Records a Historic 70% Growth in Diamond Sales Volume in 2025

HRD Antwerp Launches Globally Recognised Diamond, Gemmology and Jewellery Education Programmes in India

Antwerp Diamond Federation Welcomes EU Decision Not to Impose Import Tariffs on U.S. Diamonds

POPULAR CATEGORY

ABOUT US

FOLLOW US