India Increases Customs Duty on Gold

The strike by Indian jewelers continued to roil the gold market as the work stoppage by gem and jewelry companies rolled into its fourth day.
Gold artisans and small businesses across the Indian continent are protesting the increase in the excise duty on imported gold and an additional one percent excise duty hike on unbranded jewelry.

Leaders in the All India Gems and Jewelry Trade Federation and the All India Sarafa Association were furious at the Indian government and called for members to continue the strike. Leaders of the strike met with the finance minister on Monday and demanded a rollback of the new taxes.
Subhash Gupta, president of the Rajasthan Sarafa Association, praised the strike although business is collapsing. It will take time to recover the losses, Gupta said. Orders worth crores of rupees are waiting on the sidelines and ready to move forward. A crore is ten million.
People buying gold will need to watch for this movement and time their gold trading.

This hike in excise taxes is impractical, said Rajesh Dhamani, secretary of the Jaipur Jewellers’ Association. He noted that the excise tax has shot up to four percent over a four month period. More than 3,000 shops have remained closed since Saturday. The finance minister will receive a memorandum from the jewelry industry soon. The day workers in the industry are suffering most from the strike. They do work like polishing gems. Thousands of these skilled artisans work on orders that are submitted daily. With no daily orders, these workers make no money.
Meanwhile, gold has consolidated and is holding the line at $1,640 as of March 21. Factors to drive prices higher seem stalled for the moment, but people buying gold need to watch the Indian situation.

Back in India, gold trading may enter a more volatile period as gold shop owners are hearing whispers of increased smuggling. Jewelers are worried that the higher customs levies could push the Indian gold market, including jewelry, above the international price. The government has opened the gold door to smugglers who want to profit off the price differential, said one jewelry store owner

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