Cash curb to have minimal impact on sales of luxury goods
The Finance Ministry’s announcement for the budget 2017, which bans cash transactions above Rs 3 lakh, will not have any impact on the sales of luxury items due to the existing measure of furnishing permanent account number (PAN) for purchases above Rs 2 lakh, say sellers of luxury items.
“It could hardly [have an] impact because PAN card above Rs 2 lakh is already there,” said said Mehul Choksey, managing director of the Mumbai-based Gitanjali Group told the Economic Times.
Jewellers in South India are also unfazed. Kerala, Karnataka, Tamil Nadu and Andhra Pradesh account for 40% of the 850-900 tonnes of gold India consumes annually.
Joy Alukkas, chairman of the Kochi-based Joyalukkas group, said, “Post demonetisation, nearly 80% of the transactions are through cheques and cards. Therefore, even if the cash transaction is limited to Rs 3 lakh, we do not see an impact on sales.”
The luxury goods sector was already hit by imposition of a 1% excise duty on gold and diamond jewellery products in the previous Budget.
Manoj Doriyal of Salvatore Ferragamo, an Italian luxury goods firm, reckoned that the restriction wouldn’t make a difference as they functioned almost completely through card transactions.
“Payments through cards went up by almost 80% in the past couple of months for products that cost over Rs 1 lakh. Smaller items like belts, cuff links, pocket squares and ties that cost between Rs 10,000 and Rs 20,000 are being bought with cash,” he said.
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