Kolkata, Dec 11: The gems and jewellery sector in the country has reduced its outstanding debt by 26 per cent to $7.75 billion in a period of 18 months ending October this year, a senior official said on Friday.

The industry has faced difficulties in securing institutional credit in the wake of a few bank fraud cases, and the disruption due to the COVID-19 pandemic forced jewellers to opt for an "efficient management" of their finances, Gem and Jewellery Export Promotion Council (GJEPC) chairman Colin Shah said.

"The gross bank debt of India's gems and jewellery industry has reduced by a healthy rate of 26 per cent from $10.44 billion in March 2019 to $7.75 billion in October 2020," he said.

According to analysts, profit margins will improve with more turnover and falling raw material and other overhead costs.

"No major delinquency has been reported in the industry during the COVID-19 pandemic, reflecting better compliance within the sector and growing awareness for self- regulation," Shah said.

The GJEPC expects that if the current trend of exports continues, it will end the year with $20-21 billion of shipments.

Exports have slowly been improving, he said, adding that the total shipment was down by 26.45 per cent in September and by 19 per cent in October.

The decline was recorded at just 3.88 per cent in November as compared to the same month last year.

India has the potential to scale up its exports to $75 billion and its share in the world market to 15 per cent from 5.8 per cent at present, the official said.

The $36-billion gems and jewellery export industry employs about 5 million people, contributes 7 per cent to the country's GDP and 13.75 per cent to the total merchandise exports in the financial year 2020, the council said.