Indian gold traders strike, appeal govt. to mimic China's gold friendly policies
Jewellers and retailers in India observed a nationwide strike on Monday protesting the government's gold policies and calling on it to follow China's lead.
Posted: Wednesday , 12 Mar 2014
MUMBAI (MINEWEB) -
Indian jewellers and retailers observed a nationwide strike on Monday protesting against the many restrictions imposed by the Indian government on inbound shipments of gold that have hammered gold and silver imports with a 71.4% slump recorded in February to $1.63 billion,.
In a call given by the Bombay Bullion Association and the India Bullion and Jewellers Association, around 90% traders in Maharashtra, Gujarat and certain pockets of South India, joined the one day strike on March 10.
"Our call for a strike was to protest against the government policies. It was hugely successful, as bullion traders in Mumbai, Gujarat and even Kolkata observed a shut down,'' said Association president Mohit Kamboj.
Prithviraj Kothari, director of the Association said they had compiled a list of demands that included reduction of customs duty on gold, from 10% to 2%; revision of the 20:80 import scheme for exporters; and the relaxation of `Know Your Customer' norms, which had severely brought down sales at retailers.
He added that the 10% customs duty on gold and the 20:80 import rule by the Reserve Bank of India had led to a severe shortage of gold in the domestic markets and sharply pushed up premiums over international prices, making it unviable for many bullion traders to carry on normal trade.
"Bullion imports have come down drastically. The government should now revisit its import curbs, since it is crippling the industry,'' said Kothari.
In February 2013, imports of gold and silver stood at $5.24 billion. This has come down to $1.63 billion in February.
Toe China line
Harish Soni, Chairman of the All India Gems and Jewellery Traders' Federation, however, had a different point of view. Speaking to Mineweb, he said, ``By pulling down shutters, retailers and bullion traders are playing into the government's hands.''
He added: ``By striking work, traders will import less gold and consumption will be less. That is exactly what the government wants.''
However, he noted: ``We supported the move as they are fighting for the cause of the industry.'' Soni added that the strike had made a mark in Mumbai, Pune and Rajkot, in Gujarat.
Estimating the industry loss due to the strike at around $163 million (Rs 10 billion), he said the Federation had sent across a representation to the government to take ``gold imports on the official track like China. Give us schemes, like China has done for its bullion traders. The government needs to take pro active steps, rather than destroy the industry.''
Stating that the Federation had implored the Commerce Ministry to ease gold imports, since it was affecting India's gold jewellery exports, Soni said, ``traders were eager for China-like reforms in bullion sector.''
Speaking about the trade, he said, ``We have been trying to convince traders that it is in our best interest to help the government improve the current account deficit situation.''
Listing out the number of measures undertaken by the bullion community, he said, "First, we shut down the sales of gold coins and bars. Then we brought in new gold schemes to bring down imports. We also undertook educative programmes, whereby information was given as to how to help in the economic situation,'' he added.
Speaking about the ruling premiums in the market, he added: ``Though premiums are down from $160 to $80, they are still rather high. At one time, we used to fight for even $1 premium with the banks. It is clearly on the higher side now.''
Maintaining that the bullion trade was going through harrowing times, he said, ``There is monopolised business going on and very few people are getting bullion as per their requirements. Nominated agencies who import gold are quoting absurd premiums, which jewellers are forced to pay, if they want the gold.''
Vinod Jain, President of the Mumbai Wholesale Gold Jewellers’ Association added that the government policies had resulted in a high level of gold smuggling. He said that the situation had degenerated into a massive human resource problem as ``several million artisans and job workers are unemployed due to paucity of gold in the market. Most of them have returned to their villages mainly in West Bengal and Gujarat.''