Diamond Analyst, Pharos Beam Consulting LLP
The impact of gold imports on CAD will continue to remain an issue for the new government as well and they will continue to take action to restrict these imports. However, from an industry perspective, the new government should ensure that the process on the ground should be seamless and genuine manufacturers should be able to get the gold they require. What needs to be curtailed, to reduce the CAD, is the gold coin and gold bar demand. Sudden introduction of new rules causes huge disruptions in the industry and even affects the workers. The absence of gold for production has caused considerable stress among workers, many of whom live hand to mouth.
For the SME sector, what is required is to establish common facility centres and worker training. Common facilities will enable smaller units to access advanced machinery and improve the quality of their product. Skill training for workers is also necessary to improve the product and meet the changing requirements of consumers.
On the diamond side, the government needs to encourage exports. Increasing availability of finance might not necessarily be the best option, as it can lead to mis-allocation of monies, leading to heartburn down the road. The focus should be on streamlining processes like enabling memo sales, some percentage of duty free imports and allow freer return of goods sent for certification. The industry also needs to help the government by taking measures which increase the transparency in the business.