The recently announced interim foreign trade policy offers some good opportunities for the Indian gem and jewellery industry to encourage growth in these slow market conditions. But on the flip side the industry is weary of these reforms actually benefiting it.

The reforms:

Additional agencies have been nominated agencies for import of precious metals, including Diamond India Limited, MSTC Limited, Gem & Jewellery Export Promotion Council and Star Trading House. This would result in a smoother supply of gold, that which has been uneven for quite some time. Exports would be encouraged through this. The domestic market will also be benefited. The domestic market is booming at 19 percent CAGR over the last four years, as reported in the media. As of the present days, the Indian gold market is worth $27 billion, powered mainly by the wedding industry, in which, gold jewellery is an imperative component. Also, the recognition slab for Premier Trading Houses has been reduced from Rs.10,000 crore to Rs.7,500 crore turnover and import restrictions on worked corals too have been lifted. The government, under the Export Promotion Capital Goods (EPCG) scheme, has also slashed the export obligation proportionately in case of decline of exports by more than 5 percent. Surat received the status of town of export excellence. Export obligation for exporters of products in case of decline of exports has been reduced by more than 5 percent.

The industry seeks more:

The industry is happy at the inclusion of more agencies and the smooth supply of the metal. But how many such agencies are present under Premier Trading Houses in India? Not many to count for high growth rates. The omission of export restrictions on worked corals does not count for much respite as around half percent of jewellery constitute corals. Also, in the interim budget announced in the early part of February 2009, the subsidy on interest of credit for export-oriented gems and jewellery units was said to be extended, but the same has not been implemented. Surat is also not experiencing any benefits as it currently faces a huge loss of labour force.