The issues faced by the industry may strengthen smuggling, warns GJF
article source: Business Standard – June 13, 2016
More than half the organised jewellery trade has been impacted during the last few months, due to the government’s decision to make PAN Card mandatory for transactions over Rs 2 lakh, said G V Sreedhar, chairman of All India Gems & Jewellery Trade Federation (GJF). Various restrictions by the government have put the genuine trader in a spot, and have given a fillip to unethical practices in the industry, Federation officials said.
Speaking to reporters on the sidelines of the Preferred Manufacturer of India (PMI) programme organised in Chennai, Sreedhar said, “More than 50 per cent of the business has been affected in terms of value, by implementation of the PAN Card restriction. Customers are moving to the unorganised sector, where quality is a question.”
The government had, from January 1, made it compulsory for customers to produce a PAN Card if they bought jewellery worth over Rs 2 lakh. The cap was earlier at Rs 5 lakh. Sreedhar added that on an average around 30 per cent of the total sales in a retail outlet would be above Rs 2 lakh and in terms of value, it would around 70 per cent of the total sales.
He added that customers who don’t have a PAN Card or who are not willing to share the card’s details, go to an unorganised retailer, who may sell the jewellery without a bill. He said almost 75 per cent of jewellery sales happen through the organised sector, which is 25 per cent of theindustry at present.
The higher customs duty, the recently implemented excise duty along with other issues, are resulting in an increase in smuggling, which is not healthy for the country. Sreedhar added that the committee set up by the central government to look into the demands of the jewellers is expected to come up with its report soon. He said that the import of gold has come down from around 70 tonnes a month to around 30-45 tonnes.
Business in the near future is likely to be extremely good, considering the market scenario across the world is not assured with the other modes of investment. However, legitimate players in the field can benefit from this opportunity only if the government comes forward to support them, Sreedhar added. He said that higher customs duty, excise duty and others are restricting the business of genuine jewellers.
Sreedhar added that while the government had earlier said that all gold jewellery should have hallmarking by September 2016, there is a lack of adequate hallmarking centres in the country. While it would require around 10,000 centres or a minimum of 4,500 centres across the country to cater to the requirement, there are only 355 at present. And there was no addition even after the decision to make hallmarking mandatory was announced. He added that the organised sector already sells only hallmarked jewellery.
The Federaton has organised the third edition of the PMI, which is a newtorking meet for the top jewellery manufacturers and major retailers. Around 41 manufacturers and over 100 retailers are participating in the event, said the organisers.