14th India International Gold Convention on 11-13 Aug 2017 at Grand Hyatt, Goa. Concluded Successfully...
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Gem and Jewellery Industry must Create a Self-Regulatory System as per the

Best International Practices

 

Mr. Manoj Kumar Dwivedi, IAS, Joint Secretary, Ministry of Commerce and Industry, Government of India, feels GST will transform the entire gem and jewellery industry into more trustworthy sector. At the same time, he opines that the industry should adopt the path of self-regulation and identify requirements of its own as worldwide best initiatives always come from the industry. Excerpts…

What is your assessment of India’s gold and jewellery sector?

I think we are all realizing that India’s overall gold and jewellery sector which includes diamond has been going through a rapid transformation. Government is working very closely with the industry. I observe three to four major happening that are bound to transform the way this industry functions. One is definitely the “commencement of GST” which is game changer not only in taxation reform, but also in streamlining many things the way business happens in this sector. It is going to add a lot of transparency, accountability and also in the long run will bring a lot of efficiency into the system. There may be some hiccups initially – there will be teething problems, but subsequently we will lead to a situation where we will definitely be much more trustworthy sector than it is today when GST is will be fully operational.  

Another thing is “digital inclusion”. This has set a trend for a new system where people in this business have to be more accountable. Government imposed limit of Rs. 200,000 on PAN Card and said that this is how one has to account for what money goes into the sector. It cannot be used for money laundering or misuse of black money and so on. Therefore, this business should be done on merit; it should be done on its designing value, export value, competitiveness and not on other aspects. This is an important step, where digital transactions, online reporting and similarly conditions of informing any transaction which is above Rs. 200,000 through Pan Card details,  towards making the industry fully compliant.

Other than this, internationally also, lot of noises have been created and India is also falling in line of this. It is about responsible sourcing of gold. Lots of activities have started happening.  We have started working tirelessly for creating standards of international value and align ourselves with all kinds of international requirements – be it good delivery as per the OECD due diligence guidelines or be it international best trade practices. We are working with BIS and are coming up with various standards - be it for gold jewellery or refinery as well as gems and other industries. It is again big transformation that we are going through. All these put together, I must say that this business will definitely bring in lot of respectability in time to come and will grow on its merit rather than on other things surrounding it. Prime Minister also led emphasis on promoting handmade jewellery. Jewellers should not actually be selling gold -  they should be selling handcrafted jewellery on its design value. Like in apparel industry there are designers who are famous for designs and people buy it for their niche value. Something should come in jewellery industry as well.

World market for gold jewellery is $300 billion and India’s share is about $40 billion. GJEPC is targeting to grow the export to $60 billion in next five years. Towards achieving this they have given proposal of creating manufacturing hubs. How is government looking at this initiative and how would it facilitate this initiative?

First we should understand that with gold there is a dichotomy. Besides being a precious metal, gold is also a financial or savings instrument. We are not producer of gold. Therefore, importing gold and keeping it as it is, we are not getting much. But suppose we add value to gold by converting it into jewellery or various articles, and then export it or even sell it to domestic market, we are not only generating employment, but also in a very strong manner, are actually strengthening the value of gold. India has huge appetite for gold. We are the second largest consumer of gold in the world. But, we should also see it should also be matched with equal promotion of export. Therefore, when we say that we are now targeting $60 billion worth of export, the major sector which has to be focussed is gold jewellery sector. It is because gold is high value item having biggest potential to actually grow. Today, not much has been done into this; we have done fantastic job in diamond cutting and polishing sector and I think similar kind of approach is needed in gold jewellery sector.

Coming to the gold bullion sector, industry has outlined certain initiatives of its own starting with first precious metals assaying and hallmarking centre. It is also talking about India Good Delivery Standard. These are the initiatives which are taken through very transparent way in collaboration. Can you elaborate how government could support this kind of initiative?

Worldwide we have seen that the best initiatives always come from the industry. Here also initiatives should come from the industry. They have to create self-regulatory system as per the best international practices. Yes, nothing works if government support is not there. We would like the policy initiatives to be aligned with industry initiatives whereas self-regulation is the best regulation what we feel. We are encouraging hallmarking. We are looking to upgrade our standard set by BIS and align it with international standard. We are supporting various organizations who are working on this. We will adopt that and government will notify those upgraded standards. Similarly, we are trying to develop guidelines for various accreditations. Recently we came out with directions that only refineries which have BIS licences shall be allowed to import dore. Government will definitely work as an umbrella to encourage all these good practices. At the same time, I would request industry stakeholders to come forward and synergize these activities and provide the required leadership for self-regulation and come up with requirements of the industry. We would not like to thrust upon the industry. Let the requirement comes from the industry so the industry owns them and then follow.

You had a discussion with DRC and Ghana representatives here. What is the outcome?

Both these countries are important because Ghana is a huge supplier of gold and if their sourcing is ‘responsible’, if they streamline the system, then we can certainly increase the relationship. DRC also has huge resources of gold; they have to put their house in order and once they do that these are countries which could assuredly supply gold to India. And if that comes, it will not only reenergize our refinery, but also open possibilities to jointly work together on various areas. India has experience of traditional craftsmanship, skill development; we also have very vibrant MSME sector, which has worked in various sectors. This kind of collaboration will benefit both the countries.

Again, regarding discussion on bilateral issues, these countries have issues which they want India to come and help them. I think it is a very good opportunity for us to work together and since India maintains very good diplomatic relationships with countries like Ghana and Congo, therefore we definitely leverage this and try to forge a relationship which will be mutually benefitted.

What message do you want to give to delegates who come here in IIGC?

I must congratulate first for organizing such an excellent conference. As gold convention centres around gold, we find here every stakeholder like banks, refineries, bullion dealers, jewellers, intentional organizations like LBMA, DMCC, SBMA, WGC and many others. We have delegations from African countries. So when all are here, we can definitely say that since India is going through this transformation, we are standing up to become best in the world. We have established our leaderships in various sectors like space technology, and others. This is again one area where we can establish our leadership. Time will come when India will define everything related to gold because we are going to be the largest consumers of gold and we are going to be an industry where we have the largest capacity to do the handcrafting of jewellery from gold and therefore taking that into the account, if everybody comes together – if the bankers come together, various agencies working in the industry come together – I think synergy can definitely help us achieving a vision where we will be world leaders in this and we will be deciding the fate of gold and gold industry in the world.            

Disclaimer: Views are personal and not the views of the publisher.