New Delhi / Bloomberg
Jewellers in India, the worldâ€™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Shops will remain closed until the government assures jewellers that the 1 percent duty will be withdrawn, said Bachhraj Bamalwa, a director at the federation, which represents 300,000 jewellers and bullion dealers across the country. In Mumbaiâ€™s Zaveri Bazaar, Indiaâ€™s biggest gold market, protesters gathered in large numbers on Wednesday wearing white cloth caps with the words â€˜Roll-back Exciseâ€™ written in Hindi and English.
Finance Minister Arun Jaitley announced the levy on jewellery produced and sold within the country in his Feb. 29 budget as part of the governmentâ€™s efforts to boost revenues. The strike means jewellers are missing out on higher gold prices, which have rallied 19 percent this year as demand for haven assets surges amid volatility in financial markets.
â€œOur stores are closed but we are not sitting idle,â€ Bamalwa said. â€œEvery 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.â€
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 percent rise in the import duty on gold. Finance Ministry spokesman D.S. Malik declined to comment on jewelersâ€™ demand for the withdrawal of the tax.
A similar shutdown in 2012, when jewelers 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 percent.