Gem traders extend strike

MUMBAI: Jewellers in India, the world’s second-biggest gold consumer, will extend their nationwide strike in protest at the 1% excise duty announced in this week’s budget.

“Jewellery stores, shut since Wednesday, will close for another three days,’’ Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation, said by phone from Kolkata.

The group represents 300,000 jewellers and bullion dealers and says the duty will harm local manufacturers by increasing their costs and compliance burden, even as purchases slow due to a surge in the price of gold and pressure on incomes in rural India, a significant source of demand.

The smaller, Mumbai-based India Bullion and Jewellers Association said the strike would continue until the government either withdraws the tax or gives its assurance that it will be removed.

Finance Minister Arun Jaitley announced the levy on jewellery produced and sold within the country in his Feb 29 budget, as part of government efforts to boost revenues.

A similar shutdown in 2012, when jewellers closed for three weeks, was successful in getting the previous government to drop plans for an excise duty.

A record current-account deficit and slump in the rupee to an all-time low in 2013 subsequently prompted the government to raise its import tax on gold to 10%.

“There is no rationale for imposing the excise tax after they withdrew it in 2012,” Bamalwa said. “Earlier we were protesting against the import tax as it was boosting smuggling, and now we have this tax to worry about.”

Members of t he jewellery trade federation have met with Prime Minister Narendra Modi, who assured them that he would look into their concerns, Bamalwa said.

Finance Ministry spokesman D.S. Malik said no decision “can be taken on the measures announced in the budget until the Finance Bill is tabled in parliament, which may be next month.’’