MUMBAI // Jewellers across India went on strike and staged protests last week to challenge a planned excise tax, which they say would create unnecessary red tape and could put small retailers out of business.
Arun Jaitley, India’s finance minister, on Monday proposed the reintroduction of a 1 per cent excise duty on jewellery, including gold and diamond items.
“One per cent is peanuts. It’s not the money. It’s maintaining those accounts, so that’s why we’re opposing the government policy and we don’t want excise duty,” said Kumar Jain, who owns a gold and diamond jewellery shop and was among a group of jewellers protesting against the tax in Zaveri Bazaar, a popular jewellery market in south Mumbai, on Thursday.
On Friday, Bachhraj Bamalwa, a director at the All India Gems and Jewellery Trade Federation (GJF), said stores would close across the country for another three days.
The tax plan would mean that jewellers would have to deal with the excise and customs department, which is known for its “Inspector Raj” approach, said Mr Jain, explaining that as a result jewellers would have to keep detailed accounts for each of the thousands of pieces of jewellery in their stores.
Mr Jain said the cost of the tax would be borne by customers.
Most of the jewellers in Zaveri Bazaar closed their shops at the weekend.
Anil R Jain, who has a store in the market, said that he was taking part in the strike, despite the loss of business it would mean for him, and he would consider going on strike “indefinitely” unless their demands were met to scrap the proposed excise duty.
“We voted Mr Modi in so that we could do more expansion and a better amount of business, but this taxation thing is pulling us down, so we’re not happy with it,” said Anil Jain.
“This would create a lot of ‘red tape-ism’ in doing business. Many of the jewellers will go out of business because of this. If you don’t keep accounts, the authorities will come and seal your shop. Many of the jewellers are hand-to-mouth small traders and they don’t know how to keep accounts. They’re not educated.”
About 50 billion rupees (Dh2.74bn) worth of business will be lost by the industry as a result of the initial three-day strike, said the GJF, which was involved in organising the shutdown.
Gold jewellery plays an important cultural role in Indian societies, particularly during weddings and religious festivals. As many people do not have access to bank accounts, gold jewellery is often used to park savings.
Demand for gold in India last year rose by 2.5 per cent compared with the previous year, at 848.9 tonnes, which was only surpassed by China, data from the World Gold Council showed.
“Excise was introduced and withdrawn in 2005 and 2012 when the UPA government realised it was impractical to impose excise on a very large unorganised sector,” said G V Sreedhar, the chairman of the GJF.
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