PNB scam fallout: Jewellery apex body likely to cancel memberships of Nirav Modi, Mehul Choksi

Worried by the fallout of the Rs 12,700-crore PNB fraud and the toll it could take on the industry's image, the Gem and Jewellery Export Promotion Council (GJEPC) is likely to expel Nirav Modi and Mehul Choksi from the body.

Speaking to reporters, Colin Shah, vice chairman of GJEPC, said that the duo has been issued a showcause notice, as per procedure, and that the body will likely terminate their memberships over the past four weeks.

“We have asked them to explain their stand on the incident and their legal stand, that’s the legal procedure…They are supposed to reply by the end of this week," Shah said. "After that, [if they respond] a disciplinary committee will evaluate based on the fact and legal data and then we will be terminating their membership."

Membership from the council does not bar Modi and Choksi's firms from operating their businesses, but hinders their prospects -- a GJEPC member gets various certification benefits such as support in customs and access to international exhibitions etc.

Shah added that the top three retailers of both the companies in the US have stopped working with them and cancelled their contracts.

Exports to remain weak for FY18

Shah expects the exports for the year end to remain flat or have marginal growth of 2-3 percent by the end of March 2018.

Even as the industry is reeling from the scam committed by three firms of Modi and Chokshi’s Gitanjali Group through Punjab National Bank, the council is hopeful of 10 percent growth in 2018-19 as it looks at newer markets such as Brazil, Russia and South America among other regions with government support.

The net exports during the April 2017 to January 2018 period were down by 8.55 percent to Rs 1,77,242 crore, compared with Rs 1,93,898 crore in the year-ago period.

“February and March is usually good (in terms of export business). So we might end a little flat or minimal growth by the end of this year…We are expecting the growth in gems and jewellery exports to remain flat at around 2-3 percent this fiscal,” Shah said adding that it is recovering slowly as the global economies are improving and the fourth quarter is expected to do well.

At present, the USD 43-billion gems and jewellery industry contributes to 15 percent of the country's merchandise exports, the second- largest after the IT sector.