Gems and Jewellery sector's wish list to tackle crisis

06 Dec '08

6 min read

·A shortage of Kilo Bars has thus has resulted in high premiums charged by the Indian Banks and the cost has gone up by almost 1%. Gold price has become too volatile for an exporter to take price position. The industry showcases a 17% decline in the overall exports of gold Jewellery.

In addition to above,
·Recently RBI has stipulated import of bullion for supply to exporters to be counted within the minimum CRR which shall be maintained by the Indian banks. Due to this the gold loan has increased to 8% from 2.75% resulting increase in the transaction cost of exports to Indian exporters.
·Packing credit interest has increased to 11.5% from 7.25%
·The banks crystallize dollar bills in 30 days after due date & 90 days after crystallization the same credit is termed as NPA. If 10% of the total credit limit becomes NPA, then the whole exporting firm form is down graded and has to undergo the NPA tax
·The premium rates of the Credit Insurance Companies have hiked by 25-30% and banks have initiate for 100% margin money to issue bank guarantees to overseas buyers against the normal range of 3-5%

The above situation has burdened the Indian exporters and the situation can worsen if corrective measures are not taken immediately.

FICCI

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