Indian jewelers calls off strike; gold imports to rise

Indian jewelers calls off strike; gold imports to rise

MUMBAI - Reuters
Indian jewelers calls off strike; gold imports to rise

Indian jewellers bang metal plates with spoons as they protest during an ongoing strike in Ahmedabad on March 10, 2016. AFP photo

Indian jewelers called off a 19-day strike late on March 19 after government assured they will not be “harassed” by the excise department in collecting a new tax, the head of a trade body told Reuters.

Jewelers from the world’s second-biggest gold consumer went on an indefinite strike from the start of March after government reintroduced a 1-percent excise duty on gold jewelry after four years.

“We have called off strike. From tomorrow jewelers will open shops,” said Mohit Kamboj, president of India Bullion and Jewelers Association (IBJA).

“The excise duty will remain there, but the government has assured us officials from excise department will not harass jewelers,” he said.

Successive governments have struggled to curb appetite for gold in Asia’s third-largest economy, despite the imposition of a 10-percent import duty in 2013 and other restrictions.

Annual imports of up to 1,000 tons of gold, accounting for about a quarter of India’s trade deficit, have also prompted the government to launch a scheme to mobilize a pool of more than 20,000 tons of the metal in homes and temples.

The government decided to form a committee to address jewelers’ concerns, related to implementation of excise duty, Kamboj said, adding the committee will submit its report in 60 days.

The government imposed an excise duty in 2012, but was forced to roll it back after jewelers went on strike.

Jewelry sales in India have fallen since the start of the year due to higher gold prices and as consumers delayed purchases hoping for a cut in import duty in the budget. This has forced importers to offer a discount of up to $53 per ounce to clear inventory.

But Finance Minister Arun Jaitley surprised the market on Feb. 29 by maintaining import duty and imposing excise duty.

“There is lot of pent-up demand. Imports will rise from next week,” said a Mumbai-based dealer with a private bullion importing bank.

India’s February gold imports dropped to $1.44 billion, from $2.91 billion in January.