MUMBAI, Dec 23: Jewellery exporters have urged Reserve Bank governor Bimal Jalan to review the imposition of a 20 per cent penal interest on overdue export bills. Jewellers say the move has come at a time when domestic exports have fallen in value terms and when analysts have widely portrayed dim growth prospects in the near term.

The Reserve Bank recently slapped a minimum 20 per cent surcharge on overdue export bills and a 15 per cent surcharge on bank credit, excluding interest tax for imports. Overdue export bills are those that are not realised within the due date taking into account the usance period, the transit period as specified by Foreign Exchange Dealers Association of India (Fedai) and the grace period where applicable.

Gem & Jewellery Export Promotion Council chairman Pravin Shankar Pandya says the interest-rate hike could be the last nail in the industry's coffin, pushing exports further down by around 20-30 per cent. Reserve Bank officials, he says, "promised to reconsider the levy applicable with retrospective effect and to take it up with the governor when Jalan returns in January."

Worried about the quantum of outstanding payments, he says: "It will be a tad difficult to quantify, as a lot of banks are routing export and import proceeds. About 15 per cent of the bills could remain outstanding for a fortnight. But these are circumstantial, not intentional, delays. Diamond exports today is a buyers' market. It is, therefore, difficult to ask for timely payments."

Gem and jewellery exports accounted for 15.75 per cent of the country's total export earnings, estimated at Rs 1,17,524.98 crore in 1996-97. In the year to March 31, 1997, the total diamond caratage exported was 188.82 carats against 192.11 carats last year. However, exports were down value-wise and carat-wise, compared with the previous year. In dollar terms, exports were down 9.16 per cent to $4,234.75 million, versus the previous year's $4,661.90. The targeted amount for 1996-97 was put at $5,400 million.

In rupee terms, the decline was 3.77 per cent to Rs 1,916.34 crore, compared with the previous year's Rs 15,500.98 crore. Further, while gold and non-gold jewellery exports were up 39.62 per cent and 24.57 per cent (in rupee terms), other gem and jewellery exports declined across the board.

In rupee terms, total export of diamond, gem, jewellery (gold and non-gold), pearls and synthetic stones were up marginally to Rs 18,190.68 crore from the previous year's Rs 18,038.71 crore. In dollar terms, they were, however, down 4.84 per cent to $5,163.45 million ($5,426.61 million).

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.