Mumbai: India’s gold jewellery industry may take at least 12 months to recover after implementation of goods and services tax (GST) since the organised segment in the industry comprises only 30 per cent of the trade.
“Behavioural change is necessary in both the consumer and the trade and the inherent complexity of the supply chain will need to be factored in. It will also depend on the final tax impact and regulations,” Somasundaram P R, managing director, World Gold Council, India (WGC) said.
However, although the trade will be disrupted for 12-18 months, Somasundaram said the GST would prove “extremely good for the industry”.
The new taxation system would provide a more transparent environment as well as curb illegal trades, which had plagued the industry for long, he said. It has been estimated that around 120 tonnes of gold is smuggled into India every year.
The WGC is of the view that the demand for the yellow metal will be flat in the second half of the year after the GST rates are announced.