21-day stir cost jewellers business worth Rs23,000 crore

Jewellers ended their nation-wide strike on Friday after assurances from the finance minister that their demands would be met.

The 21-day stir has cost them business running into thousands of crores.

“Closed shutters since March 17 have led to an estimated loss of Rs22,000-23,000 crore for jewellers,” said Dinesh Jain, director, All India Gems & Jewellery Federation.

March-April is considered to be the peak time for jewellers because of wedding festivities. These two months account for about 25-30% of the business for the whole of the year.

On its part, the government has lost around Rs700 crore in taxes because of the strike, said industry experts.

What’s more, the paralysis is likely to translate into a decline in gold imports for the first quarter. In fact, a Bombay Bullion Association report shows gold imports dropped 55% in the first quarter of 2012 compared with last year.

Prithvi Raj Kothari, president of the Bombay Bullion Association, agreed. “This year, the gold import is estimated to be between 125-150 tonnes compared to 306 tonnes in the first quarter of the last year. One of the important reasons for the decline is the strike. High interest rates and inflation are also to blame.”

Various associations across the country had been on strike since March 17, a day after the presentation of the Union Budget. The breakthrough came after representatives from various bullion associations met with FM Pranab Mukherjee and Congress president Sonia Gandhi.

“The finance minister has assured that all our demands will be met… He indicated a rollback of excise,” said Jain.

The bone of contention between the jewellers and the government was the levy of 0.3% excise duty proposed by the finance minister on unbranded jewellery, which if implemented would add an estimated Rs150-200 crore to the state exchequer.

The traders were also upset with the proposal to double customs duty to 4% from 2% and imposition of tax collection at source, in which a customer buying jewellery above Rs2 lakh would have to pay 1% additional tax.

But some bullion representatives are still not convinced about Friday’s developments.

“Most shops are expected to open from April 7. However, there are some bodies where a consensus has not been achieved and they may continue to keep their shops closed. But it is likely that all jewellers will be back in business from Monday,” said Kothari.

A rollback of excise duty can come into effect only when the Finance Bill is tabled in Parliament, which is slated for May 7.

But jewellery associations have not stepped back fully yet, who want the rollback in this session of Parliament, or else they would resume their strike from May 11.