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Pravin Nanavati, Joint Secretary of the Gujarat Hira Bourse

Published Date : Jan 31, 2017

Excerpts from Pravin Nanavati’s interview with GA:

“We need a separate ministry for the G&J sector”.

“The government’s decision to bring transparency into the G&J industry via a cashless system has been a hasty one”.      

The gem and jewellery sector has been among the worst affected by demonetisation. How do you analyse the situation?

I agree the decision has impacted the industry. But I am also sure that the PM Modi must have taken this decision with some long-term benefits for the industry in mind. So going forward I believe the scenario will improve and buyers and investors will return to the industry eventually.

Given the size of this industry and the foreign exchange it contributes to the nation’s coffers, I am quite confident that the government is actively considering ways and means to help the industry get back on track.   

Media reports suggest Surat which is the global hub for diamond cutting & polishing industry has borne the brunt of this decision?

That is correct. In fact approx 20% of the diamond cutting & polishing units here have not opened after Diwali. The industry was already going through a slowdown and we were hoping this year would be better, but that has not been the case thus far. 

The demonetisation issue has created a severe cash crunch for the industry which is primarily cash-driven and this in turn has resulted in massive job losses in Surat, as in other parts of the country.

Do you agree with the government’s decision to encourage cashless transactions across all sectors?

Not really. It’s very difficult to implement. 70% of our population is still uneducated or less educated unlike the US or Europe where such transactions are the norm.  I think it’s too early to implement such stringent rules. Ideally, the government should have waited for a couple of years to educate the people fully about this and then implemented the decision. 

Gold seems to have lost its lure as an investment destination in recent months. What do you think are the reasons behind this trend?

I think younger buyers have different priorities and are more interested in investing in technology as opposed to gold. But traditional buyers have retained their faith in this precious metal though not with the same enthusiasm as before. I think going forward diamond jewellery may replace gold as a preferred investment destination among buyers.

Why do you think diamonds have the potential to replace gold in India which is one of its biggest importers?

Across the world, people are investing heavily in buying diamonds for investment purposes. It’s a trend that is now slowly beginning to take root in India as well, mainly due to the rapid fluctuations in gold prices. I believe the domestic diamond market can look forward to a very bright future in the time ahead. 

So do you think 2017 will be a ‘Happy New Year’ for the G&J industry in the true sense?

(Smiles) Maybe not in the short term but in the long run definitely yes. The government is also keen that the industry grows, exports happen and more and more people invest in this industry. 

What have been the initiatives taken by industry bodies like the SGCCI to support & develop the diamond industry in Surat?

The G&J industry supports approx 10 lakh people in the state and is therefore an important economic driver and employment generator. The government has always reacted positively to all our concerns regarding the industry. For example, VAT for the G&J industry in Gujarat is pegged at only 1% and 0% percent for diamonds – thanks to the continued support of the government.

I am sure the government will consider our grievances sympathetically in the post-demonetisation era as well. For example, I think the INR 2 lakh limit for transactions sans a PAN card needs to be hiked. I however support the recent compulsory hallmarking ruling for gold jewellery which I think is in the best interests of the customer.

What are your expectations from the forthcoming Union Budget from an industry perspective?

First and foremost the government should ensure that the industry should not suffer on account of a high GST rate, or if possible the industry should be exempted altogether.

Secondly, the government needs to set up a separate ministry to address the concerns of the G&J industry as it has done for the textile sector. Moreover export regulations need to be simplified and incentivised further so that the industry is encouraged to earn maximum foreign exchange for the country.

- By GemAtlas Team