KOLKATA: Indian banks demand that importers of gems and jewellery from the country route all invoices through banks has not gone down well with buyers in the US and China, exporters here said.
This situation may cause as much as a 10 per cent drop in Indias gem and jewellery exports in the current fiscal year, they warned. The sector is one of the largest foreign exchange earners for the country — exports in the fiscal year ended March 2018 were more than Rs 2.64 lakh crore. Tightening of liquidity by banks is also being felt by the diamond cutting and polishing units of Surat.
Simultaneously, firming up of rough-diamond prices by 4-5 per cent since the beginning of this year with almost no appreciation in the prices of polished diamonds is hurting the sentiment of the manufacturing the sector. “Bank finance is the lifeline of the industry and any decrease (in that) would see a decrease in gem and jewellery exports as well,” said Colin Shah, vice-chairman of the Gem & Jewellery Export Promotion Council.
Banks may be trying to ensure that only genuine players get the finance, but their insistence on processing customer invoices through banks for discounting is hampering relationships with customers as well as cash flow on a daily basis, Shah said.