Calcutta: The gems and jewellery industry is apprehensive of a contraction in exports in 2018-19 on the back of declining bank finance.

The Gem and Jewellery Export Promotion Council (GJEPC) on Tuesday said there was a concern that the $41-billion export industry could decline by 10 per cent in the ongoing fiscal and export data in the April-June period support the industry's concern.

Exports of gems and jewellery from India declined 8.84 per cent between April and June 2018 to $10.1 billion compared with $11.1 billion in the same period last year.

"The industry is witnessing a crisis of sorts as the banks have curtailed lending to traders and are demanding collateral security and extensive documentation. In such a scenario, gem & jewellery, a $41-billion export industry will see a gradual decline in 2018-19. We are hoping that the government will intervene and bring some relief to the ailing industry that contributes 7 per cent to the GDP. It is time to bring back the interest subvention scheme to help in ease of doing business," said Pramod Agarwal, chairman, the GJEPC.

Data from the Reserve Bank of India on sectoral deployment of bank credit show that gross bank credit to the gems and jewellery sector has come down from Rs 727 billion as of March 30, 2018 to Rs 701 billion as of May 25, 2018.

"Bank finance is the life line of the industry and any decrease would see a decrease in gems & jewellery exports as well. Banks are insisting that all customer invoices should be through the bank. Banks have also taken away all benefits on assessment fees due to which cost of finance has gone up," said Colin Shah, vice chairman of GJEPC.