According to N Anantha Padmanaban, Chairman, All India Gem and Jewellery Domestic Council, Sale of gem and jewellery is likely to drop 10-15 per cent in the current financial year due to Goods and Services Tax (GST), high gold price and cash flow issues,
In 2016-17, the sale of gem and jewellery was nearly ₹3.60 lakh crore, which increased to ₹4 lakh crore last year. However, it is expected to decline to ₹3.50-3.60 lakh crore this fiscal. He added that GST did not benefit the industry as hoped, as customers need to pay 3 per cent GST as against 1 per cent Value Added Tax (VAT) before the GST regime. A customer needs to pay an additional ₹60-70 per gram of gold due to GST.
However, GST has brought many players of the unorganised sector into the organised sector. Three-to-four years ago, 85-90 per cent of the sale was through unorganised players as against about 70 per cent now. There are nearly four lakh retail stores across the country with Tamil Nadu having the maximum numbers.
On the issue of cash flow,Padmanaban said problems involving a couple of city-based jewellers affected the industry in Tamil Nadu. However, after the Nirav Modi issue, the entire industry was affected with banks refusing to provide finance. High gold price was mainly due to the Dollar fluctuation. Non-availability of skilled workers is another major problem that is affecting the industry.
