According to the council, exports in India stood at $ 10.1 billion before refunds in April-June of 2018, compared with $ 11.1 billion in the same period last year – down by 8.84 percent. In addition, new requirements have been imposed by credit providers in India, which affect Indian merchant relations with their customers and limit normal business conduct. Lenders that offer “discounting” (giving companies an advance on their customers’ unpaid bills) are increasingly insisting on clearing all the relevant invoices. Borrowers must give invoices to their bank, which sends the documents to the bank of the buyer. That means sellers only receive payment, and buyers only receive the goods, once both lenders have given their approval. The cumbersome process complicates and disrupts both business relationships and cash flow, and greatly influences the stability of the market. In addition to the transfer of the invoices through the banks, the financing costs have been significantly exceeded, due to the cancellation of benefits, among other things, on assessment fees and additional charges.
"The industry is witnessing the crisis of sort, the banks have cut loans to traders and require extensive collateral and documentation," said GJEPC chairman Pramod Agrawal. "We're working to instill trust among key stakeholders and therefore undergo a wide range of reforms. We are hoping that the government will intervene and bring some relief to the ailing industry that contributes 7% to [gross domestic product]."
During May, the GJEPC took a number of steps to deal with the crisis on a systemic level. Digital platforms were launched with customer identity mapping algorithms and a policy paper was published describing how the jewelry and banking industry can reduce the risk of financing. One of the reasons for tightening the credit card rules was a scandal that took place last January, when the Indian billionaire, Nirav Moody, allegedly stole $ 1.8 billion from the Punjab National Bank. Since the case, financial institutions in India require higher levels of collateral than usual.
