We expect a fair deal of consolidation for MSMEs in gems & jewellery sector

Colin Shah, Chairman, Gems & Jewellery Export Promotion Council, asserts that while MSMEs in the sector are benefiting from the redefinition and Aatma Nirbhar Bharat Scheme, banks are not extending loans under CGTMSE scheme, which is hampering business.

IBT: The lockdown has led to a complete washout for the gems and jewellery sector in Q1. To what extent has the sector been able to return to business as usual when it comes to essential operations?

Colin Shah: The industry has been able to recover quite well. And going forward, the Indian gems & jewellery industry is hopeful that things would further improve as now factories and units are working with 50% capacity from August. Moreover, orders have been coming in from markets like the US, China and parts of Europe. Also, demand is expected to grow further in the coming months owing to the holiday season in the Western countries.

IBT: On the other hand how are the growth trends looking in the domestic and key export markets post-Q1? What are the most encouraging signs/concerns for you from the market perspective?

Colin Shah: Post Q1, in terms of exports we are seeing a gradual recovery, and in the coming months, there would be a further boost in seasonal demand for gems and jewellery. In India, the Government has started to lift the lockdown; the smaller cities other than the metros have started doing business as usual, which is a good sign for the industry.

IBT: How has the pandemic changed customer outlook towards purchasing jewellery? Do you see a strong possibility of improved buyer sentiment in the festive season? Why or why not?

Colin Shah: Although retail sales during the pandemic were down, most of the brands have experienced a rise in their online sales. And to an extent, this shift in behaviour will continue post the Covid era too. We are expecting a strong demand for gems and jewellery during the festive season. Consumers now have disposable income, which was earlier being spent on travelling and vacations, some of it will be diverted towards jewellery.

IBT: The pandemic has compelled trade show organisers across the world to cancel shows. What steps is GJEPC taking to ensure that member exporters are able to engage with buyers?

Colin Shah: GJEPC is organising its flagship show IIJS in a virtual format in October this year, and we have got an overwhelming response from exhibitors interested in participating. IIJS will be conducted on a specially built virtual platform exclusive to GJEPC, which will be safe, secure and dynamic with all features like appointment scheduler, live chat, product catalogue and company brochure, video, meeting rooms, seminars, feedback, etc. Moreover, starting from September, we have organised a series of Virtual Buyer-Seller Meets for loose diamonds, coloured gemstones, gold-studded jewellery, platinum jewellery, and costume jewellery.

IBT: What are the challenges and benefits of digital engagement platforms in your view?

Colin Shah: The only challenge is that products cannot be viewed in the same manner that we do at a real exhibition, but with the help of the latest technology available, we are making sure our buyers can view the smallest of product details through digital enhancements. Moreover, this platform will have built-in security features, making all communication between the buyer and seller completely confidential.

IBT: How has COVID-19 impacted the SMEs in the gems & jewellery space (accounting for 85% of GJEPC members)? To what extent are the government initiatives for MSMEs under Aatma Nirbhar Bharat Package helping the gems & jewellery sector?

Colin Shah: SMEs in every industry, including gems and jewellery, have been hit the hardest by the pandemic. While we don’t have official data yet, one can expect to see a fair amount of consolidation to occur in the SME space.

The MSMEs in gem and jewellery industry are benefiting from the revised MSME definition and a host of other schemes under Aatma Nirbhar Bharat. For the benefit of MSMEs in the short term, we requested the Government to look into the financial issues concerning them, namely, financial institutions not sanctioning loans under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme to the gems and jewellery sector.

As announced under the Aatma Nirbhar Bharat Package by the FM, all banks are not extending credit in the form of automatic collateral-free loans to eligible MSMEs; as per the RBI regulatory policy dated March 27, 2020, to carry out reassessment of working capital cycle for affected businesses. The banks are extremely reluctant in doing the same, which is hampering business due to cashflow mismatch, etc.

IBT: Gems & jewellery has been identified as a champion sector by the Government. What is GJEPC’s view on the sector’s growth potential? What is the vision you have set for exports and what critical interventions are needed to achieve this vision?

Colin Shah: Our vision is to double the exports to US$ 70 billion by the year 2025. To achieve this, a comprehensive financial package of Rs. 900 crore has been proposed to the Government of India. The fund will be used for infrastructure development like the Jewellery Park in Mumbai, a Gem Bourse in Jaipur, the development of Common Facility Centres (CFCs), and setting up of Model Karigar Workshops. The fund will also be used for skill development, technology development, and brand promotion.

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Colin Shah is the Chairman of Gems & Jewellery Export Promotion Council (GJEPC). He founded Kama Jewelry in 1996 at the age of 26. Eleven years later, in 2007, Kama Schachter was formed in a joint venture with Leo Schachter Diamonds in an effort to become vertically integrated. Today, Kama Schachter ranks amongst the top ten manufacturers and exporters of diamond jewelry in Asia. Kama’s talented, flexible, multi-cultural workforce numbering 800 in three factories in India and in sales offices in the diamond bourse in Mumbai, Chennai and New York, serves the major markets of India, USA, Europe, Middle East and Australia.

Colin is the recipient of many industry accolades and plays a leadership role in many organizations, including the Gem & Jewelry Export Promotion Council of India, the Seepz Gem and Jewelry Manufacturers Association and the Young President Organization and the Entrepreneurs Organization. Views expressed are personal.