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Jewellers across India are on strike for three days gone because of a new tax on gold jewelry. The measure was announced by the government earlier this week to curb the demand for gold.
In addition to the 10% import duty, jewellers must now also charge an extra one percent tax on the sale of jewelry. The measure is already controversial, as it is likely to involve a lot of red tape.
"We have had discussions with a number of our members, but also with other organisations in our network. We have collectively decided to go on strike for three days. More than 300 companies in the Indian gold market are joining the strike, both large and small jewellers," Sreedhar GV of the All India Gems and Jewellery Federation told NDTV.
The strike started on Wednesday, but in some states of the country they have been on strike since Tuesday. Jewellers are incensed by this tax, because it is yet another attempt by the government to discourage gold buying. There is also surprise that the government is trying to reintroduce the tax, because previous attempts in 2005 and 2012 were withdrawn due to great public pressure.
"We are already struggling and trade has already fallen by 25 to 30 per cent after the government took the decision in January to register gold purchases of more than 2 lakh (almost €3,000)", stated the director of the All India Gems and Jewellery Federation. India has many small jewellers who are good at their profession but who find it difficult to fill out tax forms.
The Indian government is trying to Buy gold because the import of the precious metal creates a structural deficit in the balance of payments. But instead of encouraging exports or domestic gold mining production, the government is trying to discourage gold ownership.
Examples of this are the still applicable import levy of 10%, a temporary import ban on gold coins and an import quoutum that caused a shortage of gold in 2014. That measure was also scrapped, because the shortage of gold caused rising premiums and more illegal gold smuggling.
The government is also trying to encourage the population to return gold to the bank, in exchange for a bond that yields interest. But this savings program did not turn out to be a success either, because the population is traditionally used to saving in physical gold. India was the largest market for physical gold in the world in 2015, according to Thomson Reuters GFMS figures.
Indian jewellers on strike for three days over tax on gold
