GJEPC Seeks Additional Govt. Relief As Second Wave of Covid Hits the Industry

GJEPC is seeking further assistance from the Government of India to tide over the challenges arising from the outbreak of the deadly second wave of Covid-19 in India
Caption: Colin Shah, Chairman, GJEPC, meeting Finance Minister Nirmala Sitharaman on 26th August, 2020 in New Delhi
Caption: Colin Shah, Chairman, GJEPC, meeting Finance Minister Nirmala Sitharaman on 26th August, 2020 in New Delhi

In a letter to Smt. Nirmala Sitharaman, Hon’ble Minister of Finance and Corporate Affairs, Colin Shah, Chairman, GJEPC informed that the surge in infections had led to partial restrictions and lockdowns in various districts of Maharashtra and other states in India. A similar situation was also being witnessed in many other countries like Belgium, France, Italy, Poland, etc.

 Shah wrote, “Just as the macroeconomic numbers point to a recovery in a particular month, there is another set of data spreading the gloom of downturn the very next month. The gem and jewellery trade has also been impacted and the sector is reeling under a lot of uncertainty with closure of retail stores, restriction on travel and logistics, restriction on manufacturing capacity and number of employees coming to work to curb the spread of the pandemic.”

 He added, “It has been the endeavour of the business owners to put in place a policy for safeguarding the workers and the manufacturing staff, therefore a serious assistance from the Government is looked upon to avoid any default and overcome this period of the crisis.” 

 The GJEPC has requested the Government to consider the following requests in order to prevent any economic fallout and distress among the entrepreneurs and workers.

Extension of Export Finance Realisation Period

  • In view of the global disruption and fresh restrictions on international travel caused by the second wave of the Covid-19 pandemic, the time period for realisation and repatriation of export proceeds for exports made up to 30th June 2021, should be extended by 3 months from the date of export.
  • Similarly, due to disruption in the manufacturing activity, the permissible period of pre-shipment export credit sanctioned by banks should be extended by 3 months, for disbursements made upto 30th June 2021.

Extension of Import Payments

  • As per the RBI guideline - RBI/FED/2016-17/12, remittances for import of gold and other precious metals, wherein “clean credit’ has been given by the foreign supplier, is to be completed within 90 days from shipment.
  • It should be noted that 85-90% of the raw material is being imported for manufacturing in the gem and jewellery sector. Therefore, as there are delays due to logistical issues, uncertainties and lockdowns, the timeline for import payments for gold and other precious metal should be extended to 180 days with delegation of power to the AD Bank. 

Rescheduling of Payments – Term Loans and Working Capital Facilities/Relaxation of SMA & NPA Norms

  • To avoid financial hardship to all the stakeholders in the trade including entrepreneurs, workers and various service providers, GJEPC requests the Government to grant a moratorium of three months on payment of all instalments and interest falling due between 1st April 2021 and 30th June 2021. The same should not apply for term loan repayments and interest payments pertaining to facilities that were rescheduled during the prior moratorium from 1st March 2020 to 31st August 2020. 
  • Consequently, the above shall not result in an asset classification downgrade as the same is being provided specifically to enable the borrowers to tide over the economic fallout. 

Status Quo To Be Maintained For Credit Ratings

  • As informed by several trade members, on account of the reduced turnover and decline in demand, thereby increasing the risk perspective, external credit rating agencies have downgraded the sector which is leading to increase in interest rates and collateral requirements. Further, this is directly impacting the internal rating of individual banks.
  • The Government should direct all credit rating agencies to maintain “Status Quo” till 31st March 2022 till operations are back to normal levels, else it will lead to a serious economic fallout for the sector. 

Extension of ECLGS 3.0 to the Gem & Jewellery Sector

  • The Government with a press release dated 31st March 2021 extended the scope of the 20% ECLGS facility to 40% for specified sectors including Hospitality, Travel & Tourism, Leisure & Sporting sectors.
  • It may be noted that MSME exporters having facilities/limit above Rs.500 crore are left out completely and isolated from all the packages announced till date by the Government during these Covid times and are employing huge amount of people in the export manufacturing segment hence some relief, if not in percentage with a cap should be provided to them.

Extension of Statutory Due Dates

  • The second wave of Covid-19 forcing limited lockdowns in several states of the countries with restrictions on operations, there likely will be a delay in complying with statutory requirements.
  • Accordingly it is advisable to extend due dates for compliance and submission related to Income Tax Act, Companies Act, payment of TDS and GST related regulations. Further, extension in due date for compliance and submissions under MCA for companies and LLP should also be provided. 

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