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Jeweller’s Protest: Excise Ennui

Jewellers Associations throughout the country went on strike following imposition of one percent excise duty on gold jewellery

Nirupama Sekhri
Publish Date: Apr 25 2016 5:16PM | Updated Date: Apr 25 2016 5:16PM

Jeweller’s Protest: Excise Ennui

Jewellers Associations throughout the country went on strike following imposition of one percent excise duty on gold jewellery in this year’s Budget. They organised a protest at Jantar Mantar in New Delhi this month demanding a roll back of the levy. Nirupama Sekhri with lensman Hrishikesh Bhatt catch up with them 

Jantar Mantar was bustling with excitement on Wednesday, March 06. Despite the sweltering heat, Congress leaders, Ajay Maken, Digvijay Singh, Bhupender Hooda and his son Deepender Hooda were on the ‘stage’ that are so quick to come up on this official street of protest. 
They were doing the only one thing they seem to be keeping themselves principally occupied with these days – castigating the Government. 
This time they were demanding the rollback of the one percent excise that the Finance Ministry has levied on the gold jewellery wares, rattling the industry.
The netas were joined by a large group of jewellery shop owners and traders wearing white caps made popular by the Aam Aadmi Party, but sporting their own slogan.
FICCI’s Jewellery Review 2013 reports that the industry contributes 6 to 7 percent to the country's GDP; it is highly export-oriented, labour-intensive and provides employment to 2.5 million people in India, as compared to IT services which provides 2.1 million jobs. The domestic gems and jewellery industry had a market size of Rs 251,000 crore in 2013, with the potential to grow to Rs 500,000 to 530,000 crore by 2018.
However, the sector, specifically gold jewellery, comes with a set of economic challenges that every Government in power has tried to tackle. Firstly, it contributes substantially to India’s trade deficit – India has a very limited production of gold, yet is the world's second biggest consumer of the metal with hundreds of thousands of kilos being shipped in annually. Any drop in this demand favourably impacts India’s export-import imbalance. 
Secondly, despite its sterling value, gold is dead weight. Most of it is hoarded and locked away, not participating in the country’s economic flow.
Various governments, at different times, have tried to restrain the domesticappetite for the precious metal by introducing sales tax on gold jewellery, as well as trying to encourage people to monetise it through gold deposit and monetisation schemes.
While these measures have had moderate to low levels of success, through this year’s Union Budget the Government levied a one per cent excise dutyon top of the import duty that was maintained. 
The measure had an immediate impact on the sector. There were protests throughout the country with some jewellers in cities like Mumbai and Nagpurshutting shop for upto 18 days. 
The main concerns of the industry seems to be the unilateral way the duty was levied and the interference of the Excise Department, perceived to be corrupt in the light of its treatment of other sectors it has access to. 
While the jewellery traders agree that there is opaqueness in the way the industry functions, but giving Excise officials access to their books is not the way to deal with that. 
“In terms of a financial implication, it isn’t much, and has little to do with us – we will just pass that increase on to the consumer,” says a prominent Delhi-based jeweller. The industry’s apprehension was evident in what he added - “What we don’t want is the inspector raj that such a move will unleash on us.”
In response to the demands of the industry, on March 21 the Government’s Tax Research Unit, Ministry of Finance shot off a letter to sector associations informing the setting up of a high level committee under Dr Ashok Lahiri, former Chief Economic Advisor, to look into the industry’s concerns.The letter states that the Committee will submit its report in 60 days, after in-depth engagement with jewellery associations and representative groups.
In the interim it also clearly declares that “the central Excise authorities will not challenge the valuation given in the invoice” of jewellers, as well as clearly barring visits to shops, manufacturing units or homes of jewellers by any Excise officer.
Meanwhile, the actors on the Jantar Mantar stage were soon joined by Rahul Gandhi. Conveniently, and foolishly, forgetting that his own party had employed similar tactics during its regime, specifically the very same one in 2012, Gandhi lambasted the Government for trying to “assassinate” the industry.
After some more shouting and sloganeering, the politicians and big time jewellers boarded their sleek, air-conditioned vehicles, leaving the minions to clean up the stage after them.