Indian jewellers will go on indefinite strike from Tuesday in protest over the reintroduction after four years of a sales tax on gold jewellery, their trade body said.
The strike could curb gold imports by the world’s second biggest consumer and put pressure on global prices.
Finance Minister Arun Jaitley announced an excise duty of 1 percent on gold and diamond jewellery on Monday.
“Jewellers across the country will go on strike from tomorrow. We are urging the government to roll back excise duty,” Ketan Shroff, a spokesman for India Bullion and Jewellers Association (IBJA), told Reuters.
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 tonnes of gold, accounting for about a quarter of India’s trade deficit, have also prompted the government to launch a scheme to mobilise a pool of more than 20,000 tonnes of the metal lying idle in homes and temples.
The government imposed an excise duty in 2012, but was forced to roll it back after jewellers went on a strike.
“Jewellery sales have already been falling due to higher prices. In such (a) situation the government has raised (the) burden of excise duty,” Shroff said.
Jewellery sales in India have fallen in the last two months due to higher gold prices and as consumers delayed purchases hoping for a cut in import duty. This has forced importers to offer a discount of up to $53 per ounce to clear inventory.
But Jaitley surprised the market by maintaining the duty and instead raising the concessional countervailing duty on imports of gold dore bars, an alloy, to 8.75 percent from 8 percent.[Source: Reuters]