After demonetisation of higher value currency notes, there has been an 85-90% dip in jewellery business according to many jewellers. There is no effect on export.
The domestic business is very low mainly due to a cash crunch, despite the wedding season. The Rs 500 and Rs 1000 note which was made up of 86% of currency that was in circulation by value was demonetised on Nov 8th and after that has impacted the jewellery business.
All India Gems and Jewellery Trade Federation (GJF), who is the self-regulatory body of jewellers, said that the losses are at 85%. Before the demonetization, GJF tells that the total annual business of the industry used to be Rs 480,000 crore ($70 billion) and now a loss of Rs 30000 crore in near about 1 month, the industry has already seen.
It aims at wiping out corruption from our country, so we welcome the demonetization move. The business is witnessing a slowdown, as there is a lack of cash in the system. The wedding season business is also witnessing a slowdown. Despite being the wedding occasion, jewellers have listed 85% dip in spite being the wedding occasion, jewellers have listed about 85% dip in footfalls,” said the GJF chair G V Sreedhar.
Currently, in the country, Around 450,000 jewellers are present and 60 million people benefit the jewellery business as artisans, die, makers, polishers, transporters, and more.
The daily business used to be Rs 1400 crore before the demonetization and now is less than Rs 200 crore said by the association of jewellers. However the jewellery exports now somehow stable. Last year, the annual gems and jewellery export was recorded to be $ 40 million and the similar figures also recorded this year also. Diamonds are the largest exports. Chairman of Gem and jewellery export Promotion council Praveen Shankar Pandya tells that because we receive payment from overseas, so there is negligible impact on the export business. Due to the liquidity crunch, there are chances that the Small and Medium Scale Enterprises (SME s) might have been affected. If payments (to artisans, workers) are made online or directly to bank accounts, there should not be a problem.
This year, the gold imports are bound to fall down. 2015 saw India importing gold of value $35 billion dollars or Rs 2.38 lakh crore. The visibility of business will come but until money scenario normalises the jewellers will have to deal with failures.
In the jewellery trade, the most affected elements are artisans and labourers. Due to the cash crunch, jewellers cannot pay them their daily wages, so they have moved to their hometowns. By Online transfer, they do not accept payment. At this moment, customers are not ready to spend cash on jewellery. Till there is adequate cash in the system, we are anticipating the slowdown to continue, said by Sreedhar, GJV Chairman.
For jewellery business, Mumbai is the largest hub as per GJV which has a business volume about 30 times that of Delhi. After the demonetization, the price of gold has spiked to Rs 52000 per 10 grams from the normal rate of Rs3000/gm. However, the income tax raids created the individuals and jewellers who were selling against old notes close the illegal practice. In long run, the visibility will come in the business but until then the business has to deal with failures.