Mumbai: Jewellers in India, the world’s biggest gold consumer after China, are estimated to be losing about $150 million a day as a shutdown to protest a proposed tax enters its second week, according to the All India Gems & Jewellery Trade Federation.
Shops will remain closed until the government assures jewellers that the 1% duty will be withdrawn, said Bachhraj Bamalwa, a director at the federation, which represents 300,000 jewellers and bullion dealers across the country. In Mumbai’sZaveri Bazaar, India’s biggest gold market, protesters gathered in large numbers on Wednesday wearing white cloth caps with the words ‘Roll-back Excise’ written in Hindi and English.
Finance minister Arun Jaitley announced the levy on jewelry produced and sold within the country in his 29 February budget as part of the government’s efforts to boost revenues. The strike means jewellers are missing out on higher gold prices, which have rallied 19% this year as demand for haven assets surges amid volatility in financial markets.
“Our stores are closed but we are not sitting idle,” Bamalwa said. “Every day we gather to protest the tax and we are ready to bear the losses as we are absolutely against it. We fear this tax is going to harm the industry and affect the livelihood of all artisans and manufacturers.”
The federation, along with a second trade group, the India Bullion and Jewellers Association, has lobbied the government to replace the tax with a 1% rise in the import duty on gold. Finance ministry spokesman D.S. Malik declined to comment on jewellers’ demand for the withdrawal of the tax.
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%.