JAIPUR, India — India’s jewelry sector has gone on strike over increased import duties, affecting gold traders to retailers and costing the sector an estimated $200 million a day in lost business.
“It is the first time in seven years that we are protesting,” says Rakshit Singh, a jeweler in Jaipur. “And this is justified. The losses that we are expected to incur are colossal.”
He was referring to finance minister Pranab Mukherjee’s imposition of new duties on gold, which go up by 2 percent to 4 percent with an additional central excise tax of 1 percent. This was part of the announcement of the Indian budget for 2012-13 last week and would, in effect, raise the price of gold by more than $20 per 10 grams.
“A revolution is going on across the country,” said a government official, who requested anonymity. “While local federations in each state are issuing a call to protest, this is being followed in different ways and with changing intensities in each place.”
In the state of Rajasthan, where gold and precious stones account for a large part of its industry, the loss has been estimated to be $118.5 million in the last three days. Jewelers have been protesting in every way they can: holding candle marches, handing over memorandums to ministers, having discussions and keeping their shops closed in response to a call by the All India Gems and Jewellery Trade Federation on Sunday.
The new duty will “empower the inspectors of customs, excise and various other departments to harass jewelers, which we would not support under any circumstances,” said Bachhraj Bamalwa, the federation’s chairman.
According to research company RNCOS, the jewelry industry in India is estimated to be worth $30.49 billion, of which only 5 percent is organized. Industry estimates peg the total sector to be worth $43 billion. Gold jewelry accounts for about 80 percent of the market, with styles including diamonds and gemstones representing the rest.
According to Euromonitor International, India is now ahead of the U.S. and was the third-largest men’s luxury jewelry market in the world last year with an estimated $93.9 million in sales.
Both sides are unwilling to compromise at this time, with the finance minister resisting what he terms “pressure tactics” and the industry leaders firm in their resolve not to accept the rise in duties.