20 Jul 2019
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Demonetization Woes
Demonetisation of Currency Notes
By: Diamond World News Service
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Dec 27 2016 1:42PM
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Reference: 13743  

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The entire gems and jewellery industry has been hit badly due to demonetization. However, the industry is hopeful of getting back to normalcy in the next six months, reports Diamond World.

Change is inevitable and the faster you adapt to change, better it is for your own survival. The Indian gems and jewellery industry has seen quite a few striking change during 2016, which included PAN card compulsory for gold purchase over Rs. 2 lakh, the forthcoming Goods and Services Tax (GST) regime. However, PM Narendra Modi’s announcement of demonetization of Rs. 500 and Rs. 1000 currency notes caused panic amongst the people as well as the gems and jewellery industry.

First few days have been full of confusion and surprise. “It was expected that there will be some difficulty for the first few days as 86 per cent currency is changed,” said FM Arun Jaitley.

The last few years have been tough for the industry especially after the 2008 financial crisis. The industry has already been facing the challenges in the form of drop in demand, threat from CVD diamonds, cash crunch, etc. And the latest decision to ban the Rs. 1000 and Rs. 500 currency notes has worsened the situation. The decision has brought the businesses especially in Surat and Saurashtra to a halt. Indian diamond industry is known to be polishing more than 80 per cent of world’s diamonds.

The move has certainly hit the Indian diamond industry where it hurts the most - the cutters and polishers who have the narrowest margin in the diamond value chain. As per various news reports, diamond units in Saurashtra, including Amreli and Bhavnagar doing job-work for diamantaires in Surat, are going through a difficult time ever since the demonetization move. The workers who polish diamonds here work in the farms in the morning and polish diamonds in the evening. Their wages are always paid in cash. Once the diamonds are polished, they are sent back to Surat through Angadiyas and cash payments are sent through angadiyas. In this scenario, the labour cost is too high for the diamantaires.

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