Gems and jewellery sector feels the heat post demonetisation

By

Maverick Martins

Published
Nov 29, 2016

India's gems and jewellery industry has been heavily impacted by the demonetisation of high currency notes in the country, Care Ratings said in a report. 

The gems and jewellery sector is likely to be impacted at least in the medium-term, the rating agency added.
 
Domestic jewellery retailers are expected to feel the heat of this move in the medium term, though organised retailers are expected to withstand the impact of cash clean- up in a more resilient manner, the rating outfit maintained.

After a subdued demand scenario for exports of cut and polished diamonds (CPD) from India during large part of FY15 and FY16, which had also resulted in pressure on profitability margins in the industry, some signs of revival in demand have been witnessed during first half of FY17, it said.
 
Though export in carat volume remained largely stable, the growth is mainly led by increase in demand from the US, the world's largest diamond jewellery market.
 
However, it is expected that small and mid-size diamond polishing firms having presence in the local trade could be impacted as such trades are targeted towards smaller unorganised jewellery players who would be starved of cash following this step of the government, Care said.