In the spree of making the India the most transparent and digitized economy in the world government has announced the limit of up to INR 3 lakh on cash transactions. The move is going to give huge fillip to the digital transactions but it is also going to affect the cash prone sectors like gems and jewellery.
The industry is in comfort of not getting affected by the cash transactions limit of INR 3 lakh as the jewellers are mandated to take the buyers pan card details on purchases above INR 2 lakh and most number of transactions are happening through banking or credit card as post demonetization.
"Government’s decision of limiting transaction up-to 3 lakh is a positive decision. It will only control the generation of black money in market during demonetization. Customers has started using the online payment methods like paytm and somehow they are used to it, so the jewelry house which are performing in a structural way will not be effected by this decision but it will curve those who are not paying taxes", said Nikesh Bardia, Director, AnopChand TilokChand Jewellers Pvt Ltd.
“We don't see this move largely impacting the gems and Jewellery sector since, post demonetization, most of the transactions have been via banking or credit card”, said Samir Sagar, Director”, Manubhai Jewellers.
“Rs 3 lakh cash limit announced in today's budget does not impact the jewellery industry much. Currently, a jeweller is expected to take the buyers pan card details on purchases above Rs 2 lakh”, said Tanya Rastogi, Director, Lala Jugal Kishore Jewellers & IBJA.
Compared to the urban consumers, where tech savvy consumers are fast moving towards digital transaction, the move is largely going to affect the rural consumers where preferably maximum number of transactions being done in cash.
According to Saurabh Gadgil, Chairman & Managing Director, PNG Jewellers and Director, Indian Bullion Jewellers Association, Instead of handling more cash consumer will now have to go more bank way. Especially the rural consumer will impact much as in the rural side there are not enough number of banks which cause difficulty to the consumers for the transaction of beyond Rs 2 lakh.
Business could be affected in the conditions of NRIs holding more than Rs 3 lakh in cash.
Ishu Datwani, Founder, Anmol Jewellers says, “Sometimes there are people like the non-residents, who have official cash over Rs 3 lacs. So that business may be affected but it’s a small negligible percentage”.
Averaging 70% jewellery products sold are within the bracket of 2 lakhs. The bullion sale already has a restriction at 50k, beyond which the jewelers need to take pan card details.
“It will not have much impact on the watch industry but most of the luxury sectors those are not mandated to take pan card from buyers will have big impact of this announcement”, said Gaurav Mehta, Founder, Jaipur Watch Company.
Overall, the big ticket products especially in the luxury space which are not mandated to take the pan card details of the consumers for the transactions of beyond Rs 3 lakh are largely going be affected by this announcement of the government.