Mr. Vipul Shah is completing his term as Chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC) in September 2014. We decided to talk to him about his performance of two years. Here are the excerpts of responses given by him to Gems2jewellery.com.
G2J: What were your priorities for GJEPC when you took over as its chairman two years back and how far have you achieved them?
V.S.: The Council has always focused on penetrating new emerging markets through focused buyer-seller matching programs and trade delegations in various regions. To provide impetus to the diamond and Jewellery trade, it is imperative to promote diamonds and boost consumer confidence in the category. GJEPC will continue to promote India as the leading global gem and jewelry destination, as well as further consolidate the domestic gem and jewelry industry, while lending support and encouragement to the country’s jewelry business. The council has achieved greater milestones and further the growth that the industry has achieved thus far.
G2J: When do you think India would become a global jewellery market and how far the IIJW would be helpful in achieving that status?
V.S.: We are quite confident that things are slowly changing and it will soon start to improve for the whole gems and jewellery industry. Over the last few years, India has steadily established itself as the design destination for Jewellery in the world owing to its increasing capabilities in producing world class designs and jewellery that have accorded India the status of the sourcing hub for authentic and contemporary designs mixing traditional skill with modern design sensibilities. IIJW has seen 5 very successful editions held here in Mumbai. Each year the event has been growing bigger and getting better with the best creative designers presenting their enthralling line of jewellery. IIJW as a property has proved to the world that India is one of the prime destinations for Jewellery globally, with design talents, which are indeed world class. Shows like the IIJW definitely helps us to achieve our overall goals and establish India as the most sought after destination for Jewellery globally.
G2J: Some individual parties and organizations are organizing trade shows in Mumbai; do you think it would affect the growth of the IIJS and Signature?
V.S.: IIJS and Signature are events that are vibrant and exclusive for the domestic and international trade, where 80% of its exhibitors participate on a regular basis. Both showcase exquisite jewellery collections and create opportunities for buyers to discover the latest trends, meet with trade partners and plan their collections and inventories. Given the nature of the shows, it allows closer business ties between the participants which lead to stronger trade relations in the industry.
IIJS and Signature both have already created their niche in the industry and as the apex body of the G&J industry; it has always been our endeavor to accommodate larger participants each year. But due to the lack of a suitable convention center in Mumbai, IIJS has its limitations and thus there exists a larger waitlist for the show. This has led to other parties organize trade shows in the vicinity of IIJS.
G2J: GJEPC has been demanding a Convention Centre for almost a decade now but with no results. What options do you have for further growth of the IIJS?
V.S.: Proposals were submitted under the Indian government’s 12th five-year plan, and approved by the Ministry of Commerce & Industry, not only includes the establishment of a convention center in Mumbai, but also a common facility center at Gujarat, a gem bourse in Jaipur, a gem and jewelry park in Mumbai, a “Technology Up” program to increase the use of technology in gem and jewelry manufacturing tasks previously completed manually and a gem and jewelry training center at Domjur, Kolkata. The total proposed outlay for the gem and jewelry initiatives in the five years of the 12th Plan, which extends from 2012 to 2017, is in excess of $200 million. The council also will be involved with the Gem and Jewellery Skill Council of India (GJSCI) in establishing performance standards for the various institutes and laboratories in the country.
IIJS, Asia’s premier jewellery show has on display the widest range of gems and jewels under the categories of Studded Jewellery, Diamonds & Gemstones, Gold & Silver Jewellery, Couture, Allied, Machinery besides International Pavilions. The show, like all its previous editions, promises to be the key driver for greater trade and business in the segment. A show like IIJS that has witnessed a footfall of over 33,000 visitors and retailers from over 800 cities across India and overseas this year. The show saw a congregation of delegations across India and from a host of international destinations such as UK, Hungary, China, Hong Kong, Uzbekistan, Russia, UAE, Nepal, Myanmar, Iran, Thailand, Bangladesh. IIJS has helped in successfully showcasing the caliber of our industry and simultaneously reinforcing the credibility, and hence it’s essential for each member of the Indian Gem and Jewellery industry to participate in India’s premier gems and jewellery show.
G2J: What you would have done to narrow India’s Current Account Deficit (CAD) had you been India’s finance minister?
V.S.: Recently, the Current Account Deficit (CAD) of the country has increased and, as a result, the government is implementing all sorts of rules and regulations that are detrimental for the future of this industry in an effort to reduce that account deficit. We firmly believe that the export market cannot improve unless the domestic market also improves.
Keeping the Gem & Jewellery industry in mind, the 80:20 principle should be scrapped as it was implemented temporarily to ward of the CAD and the duty on gold should be below the smuggling threshold, which in our opinion is 3%. Also, the implementation of presumptive taxation with 2% average profit rate for the diamond industry at the forthcoming budget. This will not only simplify the procedure and litigation involved in collection of income tax but also will increase the Govt. revenue. These are a few changes that have to be made for reduction in CAD.
G2J: What are the challenges faced by the Indian gem & jewellery sector and what solutions do you suggest to solve them?
V.S.: During the recently announced Budget 2014, the Jewelry sector was largely disappointed as the import duty on gold has not been reduced, which will continue the occurrence of gold smuggling. Moreover the budget was almost industry neutral without any of the sector’s demands finding any mention in the budget. However, we believe that this budget shows the intent of the Government is positive which will improve the fiscal position of the country.
We were happy that our recommendation for rationalization of import duty of broken diamonds and withdrawal of import duty on pre forms of semiprecious and precious stones were accepted. There has also been rationalization of import duty on processed diamonds which will help the domestic manufacturing sector. We were also glad with the renewed focus on promotion of exports and reviving the SEZs in the country. We are in the process of presenting its recommendations for reviving the G & J SEZs in the country and will submit the same to the Govt. shortly.
We welcome the steps to improve the infrastructure for exports in all states by forming an Export Promotion Mission along with the State by the Central Govt. The Council’s long standing demand of creating a convention center of 1 mn sq. ft. in Mumbai may soon become a reality.
We have designed a sustained marketing campaign that would directly address the need faced by India and other emerging consumer markets. The promotion is aimed at boosting confidence in diamonds and driving the desire to own diamonds among consumers in India and other countries. At this time, GJEPC is in the process of studying the penetration, needs and consumer behavioral patterns and trends of these target groups, which will determine the formulation of plans to promote the segment.
G2J: Why do some people want to create a parallel infrastructure at Surat? Would it harm or help the Indian diamond industry?
V.S.: The Surat Diamond Bourse, which is touted to be bigger than Bharat Diamond Bourse in Mumbai, is expected to create jobs for more than 20,000 to 30,000 people. SDB will make Surat the trading hub of polished diamonds whose turnover is pegged at Rs 1.5 lakh crore. Close to 15,000 diamond traders, merchants and manufacturers are keen to set up shops in the proposed SDB. The reason for this is that most traders and processors are not in a position to house themselves in Mumbai or Mumbai-based BDB; even real estate is beyond their reach. Therefore, it was proposed a bourse be set up in Surat, as real estate is much cheaper there, the taxation structure favourable and processing, too, is concentrated in Surat. The only drawback in Surat was trade is scattered across four distant localities.
Surat is the diamond manufacturing capital of the world for past several decades. Any development to complement the manufacturing activity is welcome. However, to do so at the cost of a centre such as Mumbai, which has been the hub of the Indian diamond sector, will be completely ill-advised and unwise…Mumbai will always remain the nerve centre of the diamond industry worldwide. As it is the commercial hub of the country, Mumbai provides world-class infrastructure, international connectivity, finance and banking facilities and human resources.
G2J: Any regrets on the eve of retiring from the chairmanship of the GJEPC?
V.S.: It has certainly surprised me how quickly the time has passed, although I must say that I have thoroughly enjoyed every minute and has absolutely no regrets whatsoever.
Interview by Suresh Chotai