Change is inevitable and the faster you are accustomed to change, better it is for your own good. The Indian gems and jewellery industry has seen quite 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 quite a stir.
The gems and jewellery industry is quite happy with the decision and are hopeful that this will bring buyers back to yellow metal. Commenting on the decision, Sreedhar GV, Chairman, All India Gems & Jewellery Trade Federation (GJF) said “On a macro level, the move will impact the gems and jewellery trade in the same manner as it impacts other organized sectors and industries. However, we see it as a positive for our sector as people will repose more faith in precious metal/gold during such times. We expect the demand for pure gold to increase.”
The announcement has reportedly led to around 4 per cent hike in the demand for gold. The decision resulted in buyers queuing up at the nearest jeweller to buy gold across the country. The move will also make unorganised jewellers become more organised. “In fact, this move will encourage the industry to become more organized, and help GJF to take them towards the path of accountability and transparency. There may be some short term pain but in the larger interest of the nation, there will be long term gain. We urge jewellers’ community to exercise restraint, caution and follow Government approved norms for transactions during the next few months,” added Sreedhar GV.
The industry leaders have been talking about little instability and ambiguity for the coming months. “Prime Minister Narendra Modi’s vision to run an economy on plastic money is taking the right course. We welcome the change, comprehending the fact that there will be conditions of uneven pricing, uncertainties and ambiguity in the market for a couple of months. Like any shift in paradigm, this will also take its time to settle down and India and its economy will emerge stronger than ever. We support this initiative as corruption will definitely get a massive dent,” said Saurabh Gadgil- Chairman & Managing Director, PNG Jewellers and Director, Indian Bullion Jewellers Association.
Along with the appreciation of the step, there came a little criticism as well. Some of the industry think-tank felt that the move will trouble the small time traders. Also, the recent decision has reportedly led to increase in gold prices in the black market. As per reports, some jewellers have been selling gold at the rate of Rs. 40,000-Rs. 60,000 per 10 gm by showing back-dated entries in their book.
Hardik Kapoor, Founder of Jewelsify.com said “It is a bold step which will be positive for the economy in the long run .Although it could have been implemented in a manner where small traders and Indian SME' face less problem as already SME’s face many problems. Initially, it will cause inconvenience for small traders and businessmen in the country, where the reach of the modern banking system is still limited.”Though the decision has created chaos but it has been a welcoming move for the gems and jewellery industry. Jewellery industry is expected to flourish as the consumers will have more trust in jewellery than currency notes. Organised jewellery sector is expected to reap the better benefits than their unorganised counterparts. However, this will help them become organised in the near future.