At a time when the diamond industry is facing multiple challenges in terms of accumulated input tax credit (ITC), coupled with market and currency fluctuations, the Gems and Jewellery Export Promotion Council (GJEPC) has stepped in to assure continued job-work for smaller polishing units across Gujarat.
According to Dinesh Navadia, president of Gujarat chapter of the GJEPC, there are around 5,000 small and medium polishing units across the state that receive partly polished rough diamonds by larger traders from Mumbai and Surat as job-work.
However, with the advent of 5 per cent Goods and Services Tax (GST) on job-work and the flow of working capital drying up from banks and other lenders, traders have not been able to buy rough diamonds and supply the same for job-work to these units.
“As a result, these units are now working at much lower capacities than their original. Hence, leaders from multiple diamond associations under the aegis of GJEPC’s regional chapter have taken it upon themselves to ensure steady supply of rough diamonds for job-work to these units,” Navadia told Business Standard. As such, the industry has been reeling under falling demand, coupled with impact of the GST, as well as the lack of working capital, thus resulting in reduced rough diamond supply for polishing.
Of the 5,000 small and medium polishing units, roughly 25-30 per cent are either non-functional or operate at lower capacities. It is also estimated that the industry awaits an accumulated ITC of Rs 1,200 crore under GST. According to Navadia, to facilitate the supply of rough diamonds, common facilitation centres will be set up at key locations.
These small and medium diamond polishing units, especially in areas like Palanpur, Navsari, Junagadh, Visnagar, Khambhat, Mahuva and others rely on work from larger centres like Mumbai and Surat.
Lack of demand in larger centres has trimmed down since then, rendering diamond polishing units in smaller centres either jobless or working at significantly lower capacities.
The diamond industry in Gujarat has already seen a slowdown, with an estimated 30 per cent units being shut since August. The impact has been such, it has been estimated that India’s diamond industry turnover of Rs 1.3-1.5 trillion might be down 15-20 per cent in last one year.