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Gold traders shut shop on tax hike proposal

Gold traders shut shop on tax hike proposal
Kolkata / March 07, 2005 10:00:34 AM IST

Family-owned gold traders and jewellers, who make up about 90 percent of India's 11 billion dollar gold and diamond market, are on strike against a proposed two percent tax on branded jewellery, saying they fear the move will victimise the local small-time brands and not just the big names originally targeted by the government.

Union Finance Minister Palaniappan Chidambaram had made the proposal last month in the Central budget in a bid to capitalise on the fast-booming sector, which has seen over 28 big national and international brands making a beeline for India's huge consumer base, in the past two years alone.

The sector was further boosted in 2004 when taxes were abolished on jewellery imports, leading to a rapid expansion of the industry, particularly in small town where the traditional artisans, known for their exquisite craftsmanship with the yellow metal, getting a new lease of life.

In Kolkata, traders say the new cess would target even small time jewellers.

"Every jeweller small or big, including those selling branded ones, has to pay a tax of additional two per cent. This is unfair as this is a small scale cottage industry," said Pradeep Gosh, president of the Gold Artisans' Association.

Besides the traders, thousands of daily wageworkers being supported by the huge market are being hit by the strike. India has about 300,000 gold jewellery outlets and some three million goldsmiths and ancillary workers.

"They have closed the shops for an indefinite period, hence we are not getting work. Hence, we, the daily wage earners, are suffering due to the strike," said Nilesh Chavan, an employee.

Gold is traditionally bought as an investment in India, which has no social security schemes for most people, and sold at times of need.

Indian households have an estimated 15,000 tonnes of gold accumulated over generations.

India, the world's largest gold importer, buys an average of more than a tonne of gold a day to meet two-thirds of its annual gold needs of 600 to 700 tonnes. (ANI)


LINK: http://netindia123.com/showdetails.asp?id=71172&cat=Business&head=Gold+traders+shut+shop+on+...