Post the PNB- Nirav Modi fiasco, Indian jewellery industry has been hit with severe cash crunch and difficulty in procuring loans for expansion. The industry opened lesser jewellery showrooms in FY19 than in FY18.

Indian jeweller Joyalukkas opened just three to four stores last year and this was funded through internal accruals. Another well known retailer Malabar Gold has been following a joint venture model for each store by partnering with a local investor and hence it does not have to rely on bank finance. “However, we have been hearing from the industry that availability of bank credit has been affected and many have been going slow with expansion,” said O Asher, Managing Director, India operations, Malabar Gold.

According to Debajit Saha, Senior Aanalyst, GFMS Thomson Reuters, “A key factor that brought down gold imports in 2018 was slower store expansion. Fresh stocks for new stores accounts for a large chunk of the import demand.” The export sector did not remain unaffected either. Gems and jewellery exports for FY19 shrunk by 5 per cent to sub $40 billion levels. However, Gems and Jewellery Export Promotion Council (GJEPC) hopes that banks will take a positive outlook on the sector in FY20.

According to Colin Shah, Vice Chairman of GJEPC, “The banking sector exposure to the gems and jewellery sector is mere 2.5 - 3 per cent of the overall requirement for the sector. The industry urges to the banks to relax some norms for working capital lending to the sector. Time has come that the banking sector should look at the gems and jewellery sector in a serious manner, it is only then, India can become world leader in gems and jewellery exports,” he commented.