CHENNAI: Lack of institutional finance support due to Nirav Modi scam, coupled with introduction of value-added taxes on gold buying by Dubai, resulted in an 11% year-on-year contraction in gold jewellery exports from India in February. India exported Rs 23,613-crore worth gold jewellery in February. Exports between April 2017-February 2018 was down 7.5%, data from the Gems and Jewellery Export Promotion Council (GJEPC) showed.The tottering exports market was dealt a body blow when institutional credit lines dried up in the aftermath of the PNB-Nirav Modi scam. "Fund availability has completely dried up," an exporter said. The export situation worsened since January (exports had fallen 3% YoY then), after Dubai introduced a value-added tax of 5% on gold from January 1. The Gulf city is one of the biggest jewellery markets - nearly 50% - for Indian ornaments.
Data also shows that, while the exports of diamonds and gold jewellery was flat at 0.42% growth, gold medallions and coins dropped 62%. Silver jewellery exports dropped 5%. "Exports is likely to show a dip in the overall fiscal as well," said Pramod Agarwal, chairman, Gems and Jewellery Export Promotion Council, (GJEPC). The industry body has guided to a 10% growth in FY19. GJEPC vice-chairman Colin Shah said, "FY19 is expected to clock a growth of 10% or more, with the top markets US and UK expected to perform better."
GJEPC, with 6,500 members, is seeking uniform regulations for bank finance. At present, the different banks adopt different valuation methods for loans. While one will seek diamonds as collateral, another might lend purely on the balance sheet of the exporter. Divine Solitaires MD Jignesh Mehta said, "The industry is in consolidation mode and, hence, there is a dip in exports. We expect marginal growth for the current fiscal."