Industry

Nepal’s budding jewellery industry insiders have mixed feelings after the government lifted a ban on diamond import

Nepal doesn’t have a big market for jewellery embedded with diamonds - the price fo which is hard to determine as it depends on the clarity, cut, colour and carat. 

But the market does exist. And so do jewellery traders who seem quite busy reorganizing their old stocks ahead of the festival season which will be followed by the wedding season.

The government partially lifted the import ban on 10 luxury items, including diamonds, colour television, snacks, toys, playing cards and cigarette and tobacco products on August 31, just ahead of the festival season.

While the jewellery traders have welcomed the decision, they say other importing rules have become a downside to conducting business.

Nepal boasts thousands of jewellery-makers in its towns and cities. But the exact number of diamond traders is unknown.

None of the diamond traders NepalMinute.com approached would reveal the volume of trade in monetary terms.

It is estimated that there are dozens of jewellery-makers spread across different cities.

Of them, only around 30 to 40 percent have been using diamonds in their products, which is essentially a raw material for them.

So when the government decided to put an import ban on it in April this year, the industry was left in a lurch.

Yet the good news is this: there were buyers.

“We sold whatever we had because without import we could not manufacture new stock,” Jyotsna Shrestha, president of Nepal Gem and Jewellery Association, told NepalMinute.

While they are happy about the latest relaxation in the government’s import policy, traders say this has come a little too late.

“It takes us almost a month to import diamonds and for Dashain, there is less than a month,” she added.

Therefore, the companies are using their old stock for the festival season.

On the other hand, they are also looking ahead.

Suneet Agarwal, the owner of Diamond Gallery Private Limited, who also is an executive member of the Nepal Gem and Jewelry Association, said that they are preparing for the future as it is not possible to create new stock for Dashain.

“We are now looking forward to Deepawali or Tihar and the upcoming wedding season,” he added. 

Letters of credit

Apart from this, there have also been changes in the opening letters of credit (LC) rules. As per Nepal Bank website, "a letter of credit is a document that guarantees the buyer’s payment to the sellers. It is issued by a bank and ensures timely and full payment to the seller."

Previously, the diamond importers had a draft system, which means that the payments to the banks could be made slowly within 90 days. Therefore, the importers had a credit facility.

However, now banks require these traders to make full payments in cash when they open an LC.

“Our money stays with the bank for three weeks, which means that it has been frozen,” Shrestha added. The banks do not release the money to the suppliers till the products are cleared at customs.

Agarwal seconds it. “It is good they have uplifted the ban. But the new LC system is bothering us a lot,” he said.

Import ban on 10 luxury items was first announced by the government in April, which was to remain in place till the end of the fiscal year or mid-July. However, the government extended the ban till August-end and tightened restrictions on motorbikes and mobile phones.

Also read: Four sectors hit hard by Nepal's import ban