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FICCI Suggests Ways to Finance Industry Growth

Group releases findings on how banking can work better with the gems and jewelry industry.
Nov 25, 2011 12:29 AM   By Dilipp S Nag
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RAPAPORT... The Federation of Indian Chambers of Commerce and Industry (FICCI) on Thursday organized its third annual Gems & Jewelry Conference in Mumbai, with an aim to ''build bridges'' between the banking sector and this industry to maintain a growth trajectory.

Devang Rawal, president and regional business head at Yes Bank, presented highlights of the FICCI–YES Bank Knowledge Report, which included various issues and challenges being faced by the industry.

"Some of the issues that have been brought out are quite relevant. Non-availability of foreign currency, treasury related issues, issues with financing the asset backed loans are keys to financing growth in the industry," Rawal said.

The annual conference discussed issues such as: Creating a bankable business plan, prudent export financing, initiating an initial public offering (IPO), innovative financial instruments and products, reducing cost of finance, skills development, financing retail growth and bullion financing.

''This program is intended to help the banking and the gems and jewelry industry to have a greater clarity in solutions to the issues and challenges faced by the Indian industry,'' said Stephane Vinogradoff, managing director of Antwerp Diamond Bank. ''Every effort is being made towards understanding the business framework of the industry and we are willing to take on the responsibility to lead banks in India in this sector.''

India's gems and jewelry industry is one of the largest employment sectors and the largest in foreign exchange earnings for its exports to the U.S., E.U. and to United Arab Emirates (UAE), which is the distribution center for most African and CIS countries.

Rajiv Jain, chairman of Gems and Jewellery Export Promotion council (GJEPC) stated that India is currently competing with countries that have very low interest rates and the industry needs a  friendly trade and regulatory framework by the Reserve Bank of India (RBI). ''A promising future awaits India in the gems and jewelry industry by moving up the value chain with rapid innovations and aesthetic designs,'' he added.

Ashok Minawala, past chairman of the All India Gems and Jewellery Trade Federation (GJF), added that the non-organized sector, which basically represents 94 percent of the market share, will witness the highest rates of growth while at the same time consumer product knowledge will become an important factor in this industry.

''With jewelry being an indelible part of our lives since time immemorial, brands have succeeded in adding value in the minds of the consumers,'' added Mehul Choksi, the chairman of FICCI's gem and jewelry committee. He also highlighted the issues faced by the industry and placed emphasis on the trust factor between the consumer and the supplier.

''We also need to further organize this industry which will lead to a faster growth rate and at relatively cheaper capital and finance,'' Choksi said. He added that the growth will come from smaller Indian cities and emerging markets of the world such as southeast Asia, the Middle East, CIS countries, Latin America and China.

Some of the recommendations of FICCI–YES Bank Knowledge Report for the industry included higher levels of incorporation, creating a central governing body, jewelry making-local to global and creating global brands. For the government, the report suggested granting industry status to the gems and jewelry sector, review  tax  policies, push for jewelry manufacturing infrastructure and hallmarking. For the banking system, it recommended higher support from RBI and offering of new financing products.
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Tags: Antwerp Diamond, bank, diamond, Dilipp S Nag, FICCI, financing, GJEPC, GJF, India, Jewelry, Mehul Choksi, YES Bank
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