Jewellers, who have been on strike since March 3 in protest against a new levy on gold purchases introduced in the Budget, on Tuesday announced their decision to stop sales of bullion bars with immediate effect.
The move will likely affect almost a quarter of their overall sales, while also reducing gold imports, which had earlier been driven due to a surge in purchases.
Typically, bullion bars are used by people to park unaccounted wealth or black money. The bullion is later converted into jewellery or liquidated into cash when the need arises.
More than 250 to 300 tonnes of the total 900 tonnes of gold annually imported by jewellers, is bought into the country in the form of bullion bars of 100 gm each.
“The decision to stop bullion bars sales was taken voluntarily by jewellers late Monday evening. We have decided to join the government in its efforts to curb black money,” said Ashok Minawalla, director with the Gems and Jewellery Trade Federation (GJF), explaining the rationale behind the decision.
The GJF, along with more than 300 associations under its umbrella, have been on a strike since March 2, asking the government to roll back the proposal to levy excise on the gems and jewellery sector.
With the government so far not showing any response, the strike was first extended from March 4 to March 7, and then indefinitely.
It is not the first time that jewellers have made such an offer. In 2012, too, when the Congress-led UPA government had suggested a similar excise levy, they had offered to stop bullion bar sales.
“However, we want to make it clear that the decision to stop bullion bar sales is not linked to the strike. This is our way of joining hands with the government. We will continue with the strike,” Minawalla said.
The finance minister had proposed an excise duty of 1% on the jewellery sector in the Union Budget. The government is adopting a tough stance on the issue as it feels this is a good source of revenue, and such units have never paid excise.