Access to bank credit, a challenge for the jewelry industry


Access to bank credit remains the major challenge for the Indian gemstone and jewelery sector despite the growth in market share of chain stores (national and regional) steadily increasing over the past decade.

Although there are many promising signs that the retail market is moving towards a more robust and organized ecosystem, more than 20% of loans made to this sector have become non-performing assets, causing the gemstone industry to gems and jewelry only earns 2.7% of total credit issuance, said the World Gold Council report titled “Structure of the Jewelry Market.”

Gain market shares

Funding is even more troublesome for small independent jewelers who tend to rely on the monthly gold program for funding. The report presumes that national and regional chain stores will continue to gain market share due to the large inventory they are able to carry.

Conversely, if smaller players are unable to meet accepted standards of transparency, their access to credit will be limited, as banks and financial institutions remain reluctant to lend to the gemstone and jewelry sector, he added.

Despite being one of the largest gold jewelry manufacturers in the world, the Indian jewelry manufacturing industry is still very fragmented and unorganized with only 15-20% of manufacturing units operating as facilities. organized and on a large scale, i.e. less than approximately 10%. five years ago.

Somasundaram PR, Regional CEO (India) of the World Gold Council, said smaller players need to become more transparent and adapt technology faster if they are to access credit and protect their market share.

Change of hours

The wave of change facing the industry due to technical adoption and broader tax compliance in the economy can be a boon for those willing to transform, but there is significant risk for those whose business models continue to rely on legacy practices, he added. .

The manufacturing industry is still dominated by small jewelry workshops and artisans. Industry estimates suggest there are 20,000 to 30,000 manufacturing units across the country. While ‘karigars’ (artisans) form the backbone of the gemstone and jewelry industry, many still work in extremely precarious conditions and are underpaid compared to other industries, the report says. .

Government and industry are increasingly focusing on moving manufacturing from congested centers to jewelry parks, which will help organizations in the sector. These integrated industrial parks will provide access to facilities for artisans under one roof, including manufacturing units, commercial areas, residences for industrial workers, business support services and an exhibition center.


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