Jewellers in India strike for first time since 2005

MUMBAI: Gold jewellers in India, the world’s largest bullion buyer, shut shops for a third day to protest against an increase in taxes, which threatens to “shrink” the industry, according to a traders’ group.

More than 90% of the nation’s 300,000 jewellers closed shops yesterday, Bachhraj Bamalwa, chairman of the All India Gems & Jewellery Trade Federation, said in an interview. The group wanted a new excise duty of 1% on non-branded gold jewellery to be withdrawn, he said.

India increased taxon gold imports for a second time this year and announced the levy on non-branded jewellery to rein in a widening current-account deficit after imports jumped to a record. Overseas purchases might plunge 35% this year from a peak of 969 tonnes in 2011 because of higher taxes, the Bombay Bullion Association said yesterday.

“Higher costs of importing gold combined with a weakening rupee deal Indian gold demand a double whammy,” Edel Tully, an analyst at UBS AG, said in a report.

Finance Minister Pranab Mukherjee raised the import duty on gold bars and coins and platinum to 4% from 2%, after doubling the tax in January. A levy on gold ore, concentrate and so-called dore bars for refining would be doubled to 2% and an excise tax on refined gold will climb to 3% from 1.5%, Mukherjee said last week in his budget speech for the year beginning April 1.

The jewellery “industry is still unorganised and the production is carried out in very small shops,” the federation’s Bamalwa said from Kolkata.