The All-India Gems and Jewellery Trade Federation (GJF) has gone on a three-day strike starting Saturday to protest against the Budget proposals announced on Friday.
Close to three lakh jewellers under the trade federation have joined the strike, shutting all jewellery establishments during March 17-19.
The Union Finance Minister, Mr Pranab Mukherjee, has proposed to bring unbranded precious jewellery under the excise duty net and raise customs duty on gold bars and coins.
There is also a proposal to increase import duty on gold from two per cent to four per cent.
This apart, the Government has also proposed to levy one per cent tax for cash purchase of jewellery worth more than Rs 2 lakh.
The move will not only affect the domestic industry but also encourage smuggling of gold, said Mr Bachhraj Bamalwa, Chairman, GJF. “Jewellery worth over Rs 2 lakh sold to a customer on cash will now attract one per cent tax to be collected at source,” he said.
While the industry has been still struggling to stand up from the after-effects of recession, such a step will certainly hit the industry hard.
“It will discourage organised retail in jewellery trade and will create additional hurdles for the consumer and the trade,” Mr Bamalwa said.
Gold prices are likely to inch up by about Rs 1,150 per 10 gm on account of all these hikes.
According to Mr Bamalwa, the domestic gold demand – which has witnessed a 30 per cent dip in volume terms during the third and fourth quarters of the current fiscal – is set to be further affected due to the price rise.
“The domestic demand had witnessed 10 per cent growth in the first and second quarters of this year.
“However, there has been 30-35 per cent shrinkage in demand in the third quarter on account of rise in prices of the yellow metal. The fourth quarter is also not looking too bright so far.
“Under the circumstance, a further hike in duty will only be detrimental to the industry,” he pointed out.