IGJS-2018 touches on the gold industry pain points
High gold import duty, low credit exposure and excessive regulations on the gold sector are some of the pressing issues that were raised and debated during the 2nd India Gold and Jewellery Summit, held from 23-24 November at Hotel JW Marriott –Aerocity in New Delhi.
Organised by the Gem and Jewellery Export Promotion Council (GJEPC), the Summit was inaugurated by Suresh Prabhu, Minister for Commerce and Industry, Government of India (GOI) and Raj Modi, Deputy Minister of Commerce and Industry, Zimbabwe along-with senior representatives from the government, Council and the GJ faternity.
GJEPC took the occasion to argue for a reduction in regulations to help with ease of doing business for the gold sector. Pramod Agrawal, Chairman, GJEPC, urged the governmnet to lower customs duty on gold to four per cent from its current rate at ten per cent. He stated that such a reduction would allow them to double India’s gold jewellery exports and add three million jobs by 2025.
“India has the potential to double its gold jewellery exports to US$ 18 billion and add three million jobs to the existing five million by 2025. But, the need of the hour is ease of doing business and reduction of customs duty on gold at four per cent. Moreover, trade-friendly government policies will allow the industry to get a level-playing field with international competitors,” he said.
Self-regulate and innovate
In his speech, Suresh Prabhu assured that the Central Government is working to promote the GJ exports in a major way. “The ministry is working towards setting up a Gold Council and formulating an integrated gold policy to take this industry to the next level.” He said that the existing business should be upscaled and upgraded simultaneously by ensuring good quality of exports and having the laboratories maintaining a strict international standard. “We have market research based intelligence on potential opportunities in new international markets as well,” he informed.
“To provide quality human resource to the industry, we will be working with the Ministry of Skill Development to ensure that we create 3 lakhs skilled manpower,” he added. On financing issues, he said that meetings were held with bankers to address the matter as the genuine needs of the industry should be looked at. “I have again taken up the issue with the finance ministry and we will make sure that the industry is not starved of necessary finances,” he assured.
During a presentaion on global and India-centric trends on gold, Aram Shishmanian, CEO, World Gold Council urged the Indian GJ industry constituents to speak in one voice when it comes to policy changes. “India has to get proper representation in the global gold exchanges context and that’s why a comprehensive gold policy is the need of the hour. After the announcement of the Gold Exchange in the Union Budget, new initiatives such as Assaying Centre and Bullion Banking are taking shape,” he added.
In an interesting presentation, branding and management consultant Harish Bijoor discussed the concept of a brand, its application to the jewellery industry and the changing nature of this concept due digital disruption, in the domains of manufacturing, marketing and retailing. “Digitalism is the new ism that will impact every aspect of the market in the coming years. Jewellers nust to rework their approaches and adopt new strategies to deal with this reality,” he said.
Later, John Reede, Chief Market Strategist and Head of Research, WGC, outlined the different influences on gold prices in the short and longer term. Reede said that while the strength of the US dollar had been one of the most influencing important factors over time and still affected short term price movements, over time it appears that most central banks across the globe would reduce the share of US dollars held in the reserves, leading to a change in this equation.
The Ministry is working towards setting up a Gold Council and formulating an integrated gold policy to take this industry to the next level. We have market research based intelligence on potential opportunities in new international markets.” Suresh Prabhu, Minister for Commerce and Industry, Government of India
Preparing for Gold Policy
On day one, the first panel discussed the topic: ‘NITI Aayog Report: Transforming India’s Gold Industry’. Rupa Dutta, Economic Advisor, Union Ministry of Commerce & Industry, said that the governmnet is likely to finalise its recommendations regarding the proposed Gold Policy and share them with the Ministry of Finance soon.
Moderated by PR Somasundaram, MD – India, World Gold Council the panelists were broadly of the view that there was an urgent need for a unified gold policy and a single government department to address issues of the trade. They pointed out that it was necessary for the industry to move ahead, taking concrete steps wherever possible in specific areas, even before the formal announcement from the government.
The members also discussed steps that the industry has taken to create conditions for speedy and smooth implementation when it is announced. PR Somasundaram said that transformation in the Indian gold industry will take place only when industry and government both play their roles.
The second panel discussion touched upon the topic: Technology and Innovation in Jewellery Manufacturing – Doubling the Exports. Moderated by Colin Shah, Vice Chairman, GJEPC, trade pundits discussed the role that new technologies could play in the process of making the Indian jewellery industry the leading global player.
- Srinivasan, Convener, Jewellery Panel Committee, GJEPC stressed the need for innovation and advancing with the times. He pointed out that while ‘smart’ technologies were being applied in so many areas, there was, as yet, not enough ‘smart’ manufacturing in this field!
Another panelist, Tarun Jain, Head of Dubai Design Academy, DMCC said that the systems in Dubai were driven entirely by technology, from start to finish. This ranged from a virtual design library, to using tech to enable the customer to adapt a design “anytime, anywhere”, right up to smooth tech-driven feedback from each and every customer.
Industry pushes for compliance
The final session of day one saw discussion on the topic – Need for Robust Standards in the Gold Industry. An intense debate took place on a couple of issues – particularly whether an industry should step forward, set its own standards and encourage compliance through peer pressure and competition to win over the consumer or be content to wait for a government to come forward and establish a regulatory framework and enforcement mechanism.
The panelists agreed that creating and adhering to standards was necessary both to win consumer confidence and comply with regulations, though there was some divergence on how best this could be achieved.
India has the potential to double its gold jewellery exports to $18 billion and add three million jobs to the existing 5 million by 2025. But, the need of the hour is ease of doing business and reduction of customs duty on gold at four percent.”Pramod Agrawal, Chairman, GJEPC
Skill upgradation of artisans
On day two, the first panel of different experts discussed ‘Employment Generation & Skill Development in Gold Industry’. The discussion saw a broad consensus on the need to upgrade the skills and the livelihoods of India’s traditional artisans and create conditions for them to prosper if India was to assume a global leadership role in the jewellery industry.
The highlights of the session were the presentations made by NSDC and IA MSME. Gaurav Kapoor said that NSDC’s Recognition of Prior Learning (RPL) programme has enabled artisans in improving their lives. A study revealed that 47 per cent received better wages and 63 per cent felt that their skills were being given better recognition as a result of the certificate.
Rajiv Chawla pointed out the various incentive schemes and other assistance available to MSMEs in the jewellery sector for upgrades, participation in exhibitions and other promotional activities etc. He urged jewellers to follow the working of Mars Jewels, an SME which had set up India’s first ZED (Zero Effect, Zero Defect) jewellery manufacturing unit with assistance from the IA MSME.
Setup bullion banks
The final panel discussion was on ‘Bullion Banking, A Tool to Leverage India’s Wealth in Gold’. Moderated by Rajesh Khosla, MD, MMTC Pamp, the panelists discussed the pros and cons of introducing metal accounts into the banking system, a blueprint for which is being prepared by a group of stakeholders in the industry. It covered areas related to purity and standards, the requisite infrastructure for storage, delivery and trading, the leasing market and possible impact on trade, purchase and delivery of metal to overseas partners and so on.
The members were also of the view that bullion banking can further promote young investors to move to innovative gold backed investment products such as gold savings accounts, gold ETF and gold bonds rather than invest in physical gold. The outcome of the discussion was that with the setting up of bullion banks, India may be able to eventually play a more dominant role in the global bullion market.