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Budget fails to cheer gem, jewellery sector

India's gem and jewllery manufacturers said the Govt had done little to rescue the embattled sector, hurt by the ongoing global financial meltdown, raising fear of more lay-offs in the near term.

business Updated: Feb 16, 2009 18:21 IST

India's gem and jewllery manufacturers said the government had done little to rescue the embattled sector, hurt by the ongoing global financial meltdown, raising fear of more lay-offs in the near term.

"There is nothing in the budget, except for the interest subvention. We were at least expecting some scheme to retain the skilled workforce," said Vasant Mehta, chairman of the Gem & Jewellery Export Promotion Council of India. (GJEPC).

The government extended a 2 per cent interest subvention to firms beyond its expiry on March 31.

In October 2008, the government had withdrawn a 4 per cent interest rate subvention granted to gem and jewellery exporters. Subsequently, in a stimulus package last December, it extended a 2 per cent interest rate subsidy till March 31.

The sector had demanded restoration of the balance 2 per cent interest rate subsidy.

"The 4 per cent interest subvention has not come in, that is a dissapointment," Mehul Choksi, managing director of Gitanjali Gems, said.

"The industry, because of the recessionary period, is very badly hurt, and we are staring at workforce exodus in the industry. And if nothing is done then more workforce will leave in the coming months," GJEPC's Mehta added.

An estimated 150,000 jobs have already been lost in the diamond cutting sector since last July, he said.

The jewellery industry employs about 1.5 million workers, while the diamond cutting industry employs 800,000 people, many of them skilled workers.

"They have not addressed a number of issues hurting the industry. Dollar, gold availibility is just not there," Gitanjali Gem's Choksi added.

Jewellery makers were also seeking an extension in the time limit for letters of credit needed for gold imports, but this was not addressed in the interim budget.