New Delhi / Bloomberg
India’s biggest gold market was shuttered on Tuesday as jewellers in the country’s commercial capital began an indefinite strike to try to reverse a plan by Prime Minister Narendra Modi to introduce an
Jewellers in Mumbai’s Zaveri Bazaar have stopped work and want the proposal for a 1 percent levy announced in Monday’s annual budget to be withdrawn, according to Ketan Shroff, a spokesman for the India Bullion and Jewellers Association Ltd., which has 10,000 members.
India is the largest gold market after China and the stoppage in Mumbai may spread. The All India Gems & Jewellery Trade Federation, which represents 300,000 jewelers and bullion dealers, will discuss later Tuesday with other associations what course of action to take, according to Chairman G.V. Sreedhar. A three-week nationwide strike in 2012 was successful in getting Modi’s predecessor, Manmohan Singh, to drop plans for an
excise tax on gold jewelry,
although the government prevailed in imposing an
“It will be a headache for the small jewelers, which make up 80 percent of the industry, and they will have another department to report to from a compliance point of view,” Sreedhar said by phone from Bengaluru in south India, on Tuesday. “This will hurt their operational ability and this will flow down to the retail level as well.”
The planned excise tax will make purchases more expensive for buyers and lead to irregular business practices, P.R. Somasundaram, managing director for India at the World Gold Council, said on Monday after Finance Minister Arun Jaitley announced the move. The planned levy will put a significant compliance burden on the industry, which has been weighed down by the import duty and a value-added tax, he said.
India imported 897.5 metric tons of bullion in 2015 and consumed 848.9 tons, according to data from the World Gold Council.