Jewellers can expect an increase of 10-12 per cent in revenues in the next three quarters due to an increase in the number of auspicious wedding days.
Jewellers can expect an increase of 10-12 per cent in revenues in the next three quarters due to an increase in the number of auspicious wedding days.
Wedding jewellery is a key driver for demand and accounts for 60 – 65 per cent of the market demand. This together with the fading regulatory hurdles is likely to provide a boost to their revenue growth says India Ratings and Research (Ind-Ra). The sector had seen a low single digit growth in Q1FY17 and flat growth in 2016.
The government’s recent measures like the increase in the limit of collectible amount under the Gold Savings Scheme to 35 per cent from 25 per cent of net worth and the compulsory hallmarking of jewellery will provide a further impetus to the organised jewellery sector growth and aid in shifting some of the demand from the unorganised sector.
The scheme contributed 15–30 per cent of the revenues for the organised jewellers, prior to 2014 when it was closed by the government.
The scheme was resumed in 2015, but the maximum collectible amount was capped at 25 per cent of the net worth.
The impending GST could see the organised jewellers facing an increase in taxes as the GST committee report recommends an all-inclusive tax rate of 2–6 per cent on precious metals.
Jewellers currently pay VAT and excise at 1 per cent each and hence the GST rate is over and above 2 per cent. They are likely to pass on this increase to the end consumers and some consumers may turn to the unorganised sector in case taxes are passed on, says Ind-Ra.
