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Thursday, March 06, 2014
India Jewelers to Protest Gold Import Curbs
Only Hope for the Gem & Jewelry Sector
New Delhi, March 6, 2014—India's gem and jewelry industry would launch a one-day strike next Monday to protest against a government clampdown on gold imports that has hurt sales and threatened the livelihood of thousands of poor artisans.
The government has raised the import tax on gold to 10% from 2% in 2012 and mandated that importers keep aside 20% of any imported gold for re-export. Gold supplies in India, which imports nearly all of its gold needs, have virtually dried up as a result.
The one-day strike by the industry is the first since jewelers went on a 20-day strike in March 2012 when the government had doubled the import tax and imposed a tax on manufacture of jewelry.
"We want the harassment by government agencies to end," said Surendra Mehta, secretary of India Bullion and Jewellers Association Ltd, a leading industry body. "The government should reduce the customs duty and speedily clear the imported gold."
While the restrictions have helped to bring down the current-account deficit by reducing supplies, but the country has lost its position as the top gold consumer to China last year.
Indian industry officials say that in particular the rule on setting aside 20% of any imported gold for re-exports has hurt supplies as the government doesn't have sufficient warehouse and other infrastructure required for regulation.
"We demand that the government should review this rule at once as our business is down by 90%," said Mr. Mehta. "Otherwise, we won't be able to sustain in the jewelry business."
The rule on re-exports was introduced in August, days after the import tax was raised.
"There is a gold control regime now in place. It has pushed back the industry by 50 years," said Haresh Soni, chairman of All India Gems and Jewellery Trade Federation.
Indian officials have also started verifying gold stocks of traders to ensure their inventories match bank records, a move that has compounded red tape for the industry.
Mr. Soni said jewelry artisans have started leaving the local industry and migrated to Singapore and Dubai in search of employment.
He said the government ought to place curbs on things such as luxury cars rather than solely target the gold industry.
Finance Minister P. Chidambaram has hinted that the government would review the current restrictions on gold imports, but no concrete measures have come through. India's current-account deficit is estimated to have more than halved to around $31 billion during the first nine months of this financial year.
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