Demonetisation of high-value currency notes is expected to have a negative impact on consumer spending, especially for luxury items including gems and jewellery, Care Ratings said as per the PTI report.
The gems and jewellery sector is likely to be impacted at least in the medium-term, the rating agency added.
Though export market and large diamantaires in the organised sector may not be impacted much, small and medium players, carrying out local trade and sourcing, are expected to feel the pinch of currency recall exercise, it pointed out.
Domestic jewellery retailers are expected to feel the heat of this move in the medium term, though the organised retailers are expected to withstand the impact of cash clean- up in a more resilient manner, the rating outfit maintained.
After a subdued demand scenario for exports of cut and polished diamonds (CPD) from India during large part of FY15 and FY16, which had also resulted in pressure on profitability margins in the industry, some signs of revival in demand have been witnessed during first half of FY17, it said as per the PTI report.
Though export in carat volume remained largely stable, the growth is mainly led by increase in demand from the US, the world's largest diamond jewellery market.
The decommissioning of Rs 500/1000 notes may not impact the CPD industry, especially as the major market for polished diamonds lies outside India, the report said.
Also, larger organised sector players undertake most of their transactions in the US dollar, with mainly employee expenses required to be paid in Indian rupee.
The gems and jewellery sector is likely to be impacted at least in the medium-term, the rating agency added.
Though export market and large diamantaires in the organised sector may not be impacted much, small and medium players, carrying out local trade and sourcing, are expected to feel the pinch of currency recall exercise, it pointed out.
Domestic jewellery retailers are expected to feel the heat of this move in the medium term, though the organised retailers are expected to withstand the impact of cash clean- up in a more resilient manner, the rating outfit maintained.
After a subdued demand scenario for exports of cut and polished diamonds (CPD) from India during large part of FY15 and FY16, which had also resulted in pressure on profitability margins in the industry, some signs of revival in demand have been witnessed during first half of FY17, it said as per the PTI report.
Though export in carat volume remained largely stable, the growth is mainly led by increase in demand from the US, the world's largest diamond jewellery market.
The decommissioning of Rs 500/1000 notes may not impact the CPD industry, especially as the major market for polished diamonds lies outside India, the report said.
Also, larger organised sector players undertake most of their transactions in the US dollar, with mainly employee expenses required to be paid in Indian rupee.
Read more - Demonetisation Updates
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