GST impact: jewellery biz may lose shine
Delay in salary, low bonus, no clarity on removing jewellers from PMLA dent sentiment
Jewellery may lose a bit of its lustre this Dhanteras compared with last year owing to confusion over GST-compliance, according to market experts. However, jewellers have lined up discounts and freebies to lure buyers and get the sparkle back.
India Bullion and Jewellers Association (IBJA) Director Saurabh Gadgil said that the market sentiment is improving but it has not yet become buoyant.“If the overall business remains the same as last year or goes marginally up by 5%, we will be very happy,” said Mr. Gadgil, who is also PNG Jewellers Chairman and Managing Director.
Postponement of salary, less than expected bonus, lack of clarity in removing jewellers from the Prevention of Money Laundering Act (PMLA) are some of the major issues that have dented the market sentiment this Dhanteras and Diwali, the festivals which generally see a lot of buying of precious metals, he added. “Also, the slowdown in economy has contributed to the sluggish market sentiment,” Mr. Gadgil said. The footfalls will increase at stores during the festivals next week, he said, but the sale ticket size will be lower.
All India Gems and Jewellery Trade Federation Chairman Nitin Khandelwal said there has been some relief for the maker players due to the government decision on the PMLA. However, due to less currency in the market the overall sentiment is dull, he said. “The momentum has started, but it is yet to pick up. There is less currency circulating in the market as an after-effect of demonetisation announced last year. Because of this, there have been less buyers this year during Dhanteras and Diwali,” he added.
The business this year is expected to be on a par with last year or could even be lower. Mr. Khandelwal said, “To encourage people to buy jewellery during the festivals, the market is full of free offers and discounts. Jewellers are trying their best to increase footfalls and create positive sentiment in the market.” People are expected to go for light weight or essential jewellery.
World Gold Council Managing Director, India, Somasundaram P.R. said the industry is bracing for the festive season and the trend is looking better than the first half. “However, the sentiment is not at its full potential. After GST was implemented it brought in its own share of challenges, which will be there for some time,” he added. GST was not adopted properly and putting gold and silver imports from South Korea in restricted list also caused disruptions in the market, Mr. Somasundaram said. “However, I would say demand will still go up and touch the level achieved last year,” he added.
In a relief to the industry, the government has removed gems and jewellery dealers from the purview of the reporting requirement under the PMLA. Early this month, the government rolled back the August 23 notification.
Source by thehindu..