Budget 2016: Jewellers to go on strike in protest over gold tax .
MUMBAI: Jewellers will go on indefinite strike from Tuesday in protest over the reintroduction after four years of sales tax on gold jewellery, 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 per cent on gold and diamond jewellery on Monday.
Successive governments have struggled to curb appetite for gold in the country, despite the imposition of a 10 per cent 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 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 per cent from 8 per cent.
What is excise Duty and why all Jewelers are opposing It.
Jewellers have been on a strike for the past two weeks protesting against the excise duty hike. In the Union budget 2016-17, excise duty on jewellery was increased from nil to 1% (without input tax credit benefit; 12.5% excise duty with input tax credit).
What has been the impact? Harsha Sodhani, a senior analyst at India Ratings and Research, says, “The last 15-odd days were anyway a lean period for demand due to lack of festive season and fewer wedding days.
Nevertheless, it is worth remembering that gold demand in India typically tends to be price inelastic. As a result, the excise duty hike may not have a meaningful impact on overall consumer demand. In fact, shares of Titan Co. Ltd and PC Jeweller Ltd have gone up 3% and 8%, respectively, so far since 26 February.
The chart shows that demand for gold jewellery in 2015 was 654 tonnes, a 5% rise year-on-year. This was slightly shy of the last six-year high of 657 tonnes.
India Ratings and Research expects jewellery demand to remain strong and grow between 3% and 5% to reach 670-685 tonnes in 2016, driven by wedding-related purchases. The rating agency expects retailers to fare well underpinned by a sustainable domestic demand, shifting preference towards branded jewellery and fading regulatory headwinds. If they’re correct, the hike in excise duty could be easily passed on to the consumer.
In short, gold jewellery demand could well remain steady this year, although rural purchases will depend on the monsoon rains. But if the prognosis is that demand will be decent and is also price inelastic, perhaps the protestors are complaining too much?
Todays News: THE jewelers in Maharashtra has put forward some demnand if front of Our finance minister.If the demands are accepted the Strike will come to an end at 14th APril 2016.
Failure to accept the demand the strike will continue,s endlessly.
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