Within the coming year, all transactions within the diamond industry in India will be near 100% through banking channels according to GJEPC Chairman Praveenshankar Pandya. Speaking to the media on the sidelines of the Signature IIJS, he said that the Council has already been campaigning in smaller towns and cities and will provide all help to the small units there in making this transition.

He said that the government announcement in this regard was entirely unexpected, and hence the industry was taken by surprise and intially paralysed to an extent. However, as it had happened soon after Diwali, which is an important selling season in India, stocks held by diamond jewellers and traders were at a relatively low level. “The fact that most units were shut for the annual Diwali vacation also gave the industry some breathing space to take stock,” he added.

The industry soon realised that most of the exporters and large manufacturers were in any case doing all their transactions through cashless and banking channels. “This accounted for nearly 70% of the business,” Pandya said.

The other 30% are units that have between 4-10 wheels and typically do job work for the larger players in their area of specialisation. They are located in small towns and many of the workers actually reside in villages, where bank networks have historically had limited access. In such circumstances, payments to the last rung in the chain were inevitably made in cash, though the transactions up to that point were through banking channels, Pandya explained.

This segment was badly affected in the immediate aftermath of demonetisation, but the industry quickly realised this presented an opportunity too. Soon after, the Council began conducting a series of meetings with the smaller manufacturers, campaigning about the advantages of transition to a cashless system. They also encouraged owners and workers in these units by providing them all types of practical assistance where needed.

Pandya stated that the campaign benefited from government initiatives like the Jan Dhan account opening drives which had already drawn many rural households into banking channels. The process of shifting to cashless operations has gathered momentum, he said adding that the Council hoped that in six months to a year the indusrty would become truly cashless.

The GJEPC chairman also discussed the state of the market and the impact of changes like the new import duty on jewellery in Dubai. He reiterated that after a strong performance in the first nine months of the current fiscal, the Indian industry was confident of achieving double digit growth in 2016-17. “There is good and fairly consistent demand from US and China, and In Europe the exchange rates are now more favourable for Indian exporters,” he explained.

Similarly, he felt that the duty imposed on jewellery imports by the Dubai government will not have a major impact. “Much of the exports to that centre are transit goods, and move on to other destinations in the region, so are not affected by the tax which is only on domestic sales,” he pointed out. While it was difficult to say what percentage of Indian jewellery imports are sold in the local Dubai market, he asserted that the figure was not very large. Pandya also clarified that places like Sharjah still have nil duty, so the units there would not be affected.