 "Jewellers call off strike")
After keeping shutters down for 43 days against the proposed one per cent excise duty on non-silver jewellery, bullion traders and jewellers opened their shops on Tuesday.
In the past six weeks, the striking jewellers not only lost on new business but also faced a tough time retaining artisans and paying rent for their establishments. To their disappointment, the government refused to give in to any demand before the strike was called off.
In the past six weeks, the striking jewellers not only lost on new business but also faced a tough time retaining artisans and paying rent for their establishments. To their disappointment, the government refused to give in to any demand before the strike was called off.
Read more from our special coverage on "JEWELLERS STRIKE"
Finally, all they won was an assurance. The government had earlier promised to set up a committee headed by former chief economic advisor Ashok Lahiri to study the issue. However, the committee is yet to be formed.
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“The government has assured us that it will come out with a liberal policy to resolve problems faced by jewellers,” said Bachhraj Bamalwa, director, All India Gems & Jewellery Trade Federation (GJF).
“The strike has been called off as fixed costs, including showroom rent, interest cost on inventory, labour cost and a lot of other expenses continued despite the business having virtually stopped,” said Ashok Kumar Phophalia, general secretary, Delhi Jewellers Association.
More than the financial implication, the excise duty will change the way jewellery is made in India. So far, a large part of jewellery supply chain was not recorded in detail as a product would go through several small artisan workshops before arriving at a shop.
Unaccounted trade would be impacted as the excise levy would require jewellers to maintain records of gold purchase. Compliance cost for manufacturing is also likely to go up.
Vijay Jain, chief executive officer of Orra Jewellery said it would lead to structural changes and consolidation in the industry. Manufacturers would have to either scale up or cut costs to protect margins.
A jewellery manufacturer, who has operations in Surat, said, “In Surat, workers are seated in a row under a single roof. There are often up to 20 rows in one room, with each row belonging to a different diamond processing company. This essentially built economies of scale due to the cross coordination of work. We foresee that gold jewellery fabrication may shift to a similar set up as it becomes beneficial to have many small fabricators in one space.”
A bullion trade association official said many small jewellers, who also work with unaccounted gold, would prefer to exit manufacturing by selling their business to a bigger company and focus on trading only.
With compliance cost rising, retail expansion could also get affected, fears a retail chain official. Most industry players said margins would remain under pressure.
The good thing, an official of Indian Bullion and Jewellers Association said, would be that almost entire business would come on books and help in keeping tabs on smuggling, estimated at 142 tonnes in 2015 by GFMS. He said the organised business would grow.
OPENING THE SHUTTERS
- Feb 29: Finance Minister Arun Jaitley proposes 1% excise duty levy in the Budget
- Mar 1: Industry bodies announce formal strike for three days
- Mar 18: Jewellers meet Jaitley, India Bullion and Jewellers Association calls off strike after assurance of "no harassment"
- Mar 20: Govt proposes panel headed by Ashok Lahiri
- Mar 29: Jewellers commence registration with excise department
- Apr 12: Strike called off