India’s Gem & Jewellery Sector Unites: A New Domestic Council to Champion Growth and Address Challenges

The vibrant and economically significant Indian gem and jewellery sector is on the cusp of a transformative change with the establishment of a new Domestic Council. This pivotal development marks a concerted effort to foster growth, streamline operations, and collectively address the myriad challenges faced by one of India’s most traditional yet dynamic industries. The All India Gem & Jewellery Domestic Council (GJC), a prominent voice within the industry, is set to play a crucial role in this newly constituted Ad Hoc Committee, ensuring continuity and experienced leadership in steering the sector towards a prosperous future.

The Genesis of a Unified Vision: A High-Level Meeting in Delhi

The journey towards this unified Domestic Council began with a significant meeting held at the national capital, Delhi. This crucial gathering brought together representatives from various segments of the gem and jewellery sector with the Director General of the Directorate General of Foreign Trade (DGFT). The primary agenda was to deliberate and formalize the structure and mandate of a dedicated domestic council, recognizing the urgent need for a cohesive body to represent the diverse interests of the industry.

Under the esteemed auspices of the Union Ministry for Commerce & Industry, and chaired by Alok Vardhan Chaturvedi, the then Director General of Foreign Trade, the meeting took place in Udyog Bhavan on January 16, 2018. The discussions underscored the government’s commitment to supporting the sector and the industry’s readiness to collaborate for collective progress. The outcome of this collaborative dialogue was a definitive decision: the formal announcement of the Domestic Council for Gems & Jewellery would be made on January 31, 2019, signaling a new era of self-governance and advocacy.

GJC’s Enduring Role in Shaping the Future

The All India Gem & Jewellery Domestic Council (GJC) has been an integral part of the existing working group that laid the groundwork for this new initiative. Its inclusion in the newly formed Ad Hoc Committee ensures that the institutional knowledge and sector-specific insights gained over years will continue to guide the council’s formation. Beyond its role in the Ad Hoc Committee, GJC is poised to take on a critical responsibility within the Drafting Committee. This committee is tasked with the monumental undertaking of drafting the constitutional documents and establishing the Election Rules that will govern the Domestic Council.

The drafting of these foundational documents is paramount. It involves meticulously outlining the council’s objectives, its operational framework, membership criteria, decision-making processes, and dispute resolution mechanisms. Furthermore, the establishment of transparent and fair Election Rules is vital to ensure democratic representation and the credibility of the council in the eyes of all stakeholders. GJC’s involvement here underscores its commitment to robust governance and an inclusive future for the entire gem and jewellery ecosystem.

Championing the Sector: The Vision of Anantha Padmanabhan

Anantha Padmanabhan, the distinguished Chairman of GJC, articulated the profound necessity and potential impact of the Domestic Council. He emphasized the challenging landscape the domestic gems and jewellery sector currently navigates, stressing that only through unity and collective action can a positive outcome be achieved for the betterment of the entire industry. His vision for the Domestic Council is not merely as a representative body, but as an active agent of change, capable of addressing deeply entrenched issues and fostering sustainable growth.

Padmanabhan highlighted a comprehensive array of challenges that jewellers across the nation face, which the Domestic Council is mandated to tackle head-on. These challenges range from policy formulation at a national level to on-ground operational hurdles, all of which impede the sector’s full potential. The council’s pivotal role will be in advocating for policy reforms, facilitating infrastructure development, ensuring fair practices, and promoting the overall welfare of every constituent involved in the value chain.

Addressing Critical Challenges: A Detailed Roadmap for the Council

The formation of the Domestic Council is a direct response to a host of pressing issues. Each challenge represents an opportunity for the council to demonstrate its efficacy and truly transform the operating environment for jewellers and artisans.

1. Creation of a National Gold Policy

One of the most significant demands from the sector is the formulation of a comprehensive National Gold Policy. India’s unparalleled love for gold positions it as the world’s second-largest consumer, yet the industry has often lacked a cohesive policy framework. Such a policy would aim to integrate various aspects of the gold economy – from mining and refining to manufacturing, trade, and investment – into a unified strategy. It would address issues of transparency, standardization, and responsible sourcing, creating a more predictable and stable environment for all stakeholders. A well-defined national policy could also unlock the potential of India’s gold reserves and streamline the supply chain, benefiting both consumers and businesses.

2. High Gold Import Duty

The existing high import duty on gold has been a persistent point of contention for the Indian jewellery industry. While intended to curb imports and manage the current account deficit, it significantly impacts the competitiveness of Indian jewellers in the global market. High duties increase the cost of raw material, making Indian jewellery more expensive than that from competing nations. This not only stifles exports but also inadvertently encourages grey market operations and smuggling, undermining legitimate businesses and government revenues. The Domestic Council will relentlessly advocate for a review of these duties, proposing a structure that supports domestic manufacturing and export growth without compromising economic stability.

3. Gold Monetization Scheme (GMS)

The Gold Monetization Scheme (GMS) was introduced with the laudable objective of mobilizing idle household gold and converting it into productive assets. However, its implementation has faced several hurdles, leading to suboptimal uptake. Challenges include lack of awareness, reluctance of consumers to part with physical gold, perceived complexities in the scheme, and insufficient infrastructure for collection and refining. The Domestic Council can play a crucial role in promoting the scheme effectively, simplifying processes, building consumer trust, and working with banks and refiners to enhance its accessibility and attractiveness, thus integrating vast quantities of idle gold into the formal economy.

4. Mandatory Gold Hallmarking Without Requisite Infrastructure

Mandatory gold hallmarking is a vital step towards ensuring consumer trust and standardizing the quality of gold jewellery. It protects buyers from deceptive practices and enhances India’s reputation as a reliable source of quality jewellery. However, the mandate has been implemented without adequate infrastructure in many parts of the country. This includes a shortage of assaying and hallmarking centers, particularly in smaller towns and rural areas, leading to logistical challenges, increased costs, and delays for jewellers. The council will lobby for the rapid expansion of a robust, accessible, and affordable hallmarking infrastructure, ensuring that compliance is feasible for all jewellers, regardless of their scale or location.

5. GST Related Problems

The Goods and Services Tax (GST) regime, while a landmark reform, has presented unique challenges for the gem and jewellery sector. Issues such as the tax rate on gold, complexities in input tax credit for certain transactions, valuation of old jewellery, and compliance burdens for smaller players have created operational difficulties. The sector, with its unique business model involving exchanges and varying raw material costs, requires specific clarifications and possibly tailored provisions within the GST framework. The Domestic Council will serve as a strong voice to articulate these concerns to tax authorities, seeking pragmatic solutions and simplification of procedures to ease the compliance burden on jewellers.

6. Harassment of Jewellers by Government Officials

Jewellers, particularly small and medium enterprises, often face unwarranted scrutiny and, at times, harassment from government officials during inspections or compliance checks. This creates an environment of fear and uncertainty, diverting valuable time and resources away from business operations. Such practices undermine the ease of doing business and breed distrust. The Domestic Council will work towards establishing clear guidelines and a transparent regulatory framework, advocating for accountability among officials and creating mechanisms for grievance redressal, ensuring that jewellers can operate with dignity and fairness.

7. Lack of Banking Finance with Respect to Working Capital

Access to adequate and affordable banking finance, especially for working capital, is a perennial challenge for the jewellery sector. Banks often perceive the industry as high-risk due to fluctuating gold prices, inventory management complexities, and perceived lack of collateral from smaller players. This financial crunch stifles growth, limits expansion plans, and makes it difficult for jewellers to manage their inventories effectively. The Domestic Council will engage with financial institutions and the Reserve Bank of India to build a better understanding of the sector’s financing needs, advocating for tailored credit products, lower interest rates, and more accessible lending norms for jewellers, thereby fueling much-needed capital injection for growth.

8. Continuation and Sustenance of Kaarighars and Artisans

India’s jewellery heritage is intricately linked to its skilled kaarighars (craftsmen) and artisans, who are rightly regarded as national treasures. Their intricate craftsmanship and traditional techniques are the backbone of the industry’s unique appeal. However, this segment often faces challenges related to fair wages, social security, lack of formal training pathways, and diminishing interest among younger generations to pursue these traditional crafts. The Domestic Council will play a crucial role in safeguarding their livelihoods, promoting skill development initiatives, creating fair trade practices, and ensuring that these invaluable skills are preserved and passed down through generations, thereby maintaining India’s artisanal supremacy.

9. Investments in Brand Building, Designing, Manufacturing, and Customer Reassurance

To thrive in a competitive global market, the Indian gem and jewellery sector must continuously innovate and invest in key areas. This includes enhancing brand recognition, fostering contemporary design capabilities, upgrading manufacturing technologies, and crucially, building robust customer reassurance mechanisms. The council will encourage and facilitate investments in these critical areas, promoting research and development, organizing design competitions, advocating for adoption of advanced manufacturing processes, and establishing high ethical standards to boost consumer confidence both domestically and internationally. This focus on quality and innovation will elevate India’s position on the global jewellery map.

A New Era of Growth and Global Leadership

The establishment of the Domestic Council for Gems & Jewellery is more than just a procedural formality; it is a strategic imperative for India’s aspirations in the global jewellery market. By creating a unified platform, the council will empower the industry to speak with one voice, advocating for policies that foster growth, innovation, and sustainability. It will bridge the gap between government policies and industry realities, ensuring that regulations are practical and beneficial.

This collective effort promises to enhance India’s domestic market, making it more organized, transparent, and consumer-friendly. Simultaneously, it will bolster the country’s position as a leading global hub for gem and jewellery manufacturing and trade. The focus on quality, ethical practices, and the welfare of artisans will not only strengthen the sector internally but also burnish its image on the international stage.

Conclusion: A Unified Path to Prosperity

The formation of the Domestic Council for Gems & Jewellery, with the active participation of bodies like GJC, marks a significant milestone for India’s glittering industry. It signifies a collective resolve to overcome obstacles, embrace innovation, and secure a prosperous future for every stakeholder, from the mine to the consumer. By addressing critical issues such as policy formulation, trade barriers, infrastructure deficits, and the welfare of its skilled workforce, the council is poised to unlock the immense potential of the Indian gem and jewellery sector, ensuring its continued shine on the world stage. This unified approach promises not just economic growth, but also the preservation of a rich cultural heritage and the empowerment of countless artisans and entrepreneurs.

Image Courtesy: RetailJeweller
NewsSource: Diamondworld.net