Jewellers call off strike after 19 days and Rs 18,000 cr loss; gold imports set to surge
There is lot of pent-up demand. Imports will rise from next week
Jewellers called off a 19-day strike late on Saturday after the government assured they will not be "harassed" by the excise department in collecting a new tax, the head of a trade body told Reuters.
Jewellers 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 jewellery after four years. A report in The Economic Times estimates that the industry has incurred losses worth Rs 18,000 crore and the government about Rs 2000 crore on account of the strike.
"We have called off strike," said Mohit Kamboj, president of India Bullion and Jewellers Association (IBJA).
"The excise duty will remain there, but the government has assured us officials from excise department will not harass jewellers," he said.
The report in ET said that jewellers will open their shops on Monday.
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 in homes and temples.
The government decided to form a committee to address jewellers' concerns, related to implementation of excise duty, Kamboj said, adding the committee will submit its report in 60 days. The ET report said the task force will be headed by former chief economic advisor Ashok Lahiri and will have three industry representatives, a law expert and Central Board of Excise and Customs officials as members.
The government imposed an excise duty in 2012, but was forced to roll it back after jewellers went on strike.
Jewellery 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 February 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.