Jewelers in India, the biggest bullion buyer, suspended the longest nationwide strike after the government assured them it will consider their concerns on a tax on non-branded gold ornaments.
The 21-day strike ended after their meeting with Finance Minister Pranab Mukherjee, who imposed a 1 percent levy for non-branded jewelery for the first time and doubled import duties on gold bars, coins and platinum in his March 16 budget speech, according to an e-mailed statement from the All India Gems & Jewellery Trade Federation.
“The minister assured that he would consider the demand for the rollback of excise duty favorably,” Bachhraj Bamalwa, chairman of the trade body, told reporters in New Delhi after meeting with Mukherjee. The strike cost the industry about 200 billion rupees ($4 billion) in lost revenue, he said.
The end to the shutdown may boost Indian imports, helping sustain this year’s 4.5 percent rally in gold prices. Bullion is rising for a 12th year as Europe’s debt crisis and concerns that global economic growth may slow fueled demand for a protection of wealth.
Mukherjee raised the import tax on gold for a second time this year as part of steps to curb the current account-deficit, partly stoked by record bullion purchases. He raised the import duty on gold bars and coins and platinum to 4 percent from 2 percent, after doubling the tax in January.
A levy on gold ore, concentrate and so-called dore bars for refining will be doubled to 2 percent and an excise tax on refined gold will climb to 3 percent from 1.5 percent, he said.
India’s current-account deficit widened to $19.6 billion in the three months to Dec. 31 from a revised $18.4 billion in the prior quarter, the central bank said in a report on March 30. That’s the widest quarterly gap since at least 1949, data compiled by Bloomberg show, threatening to revive pressure on the rupee. The currency fell 16 percent last year.
Gold for immediate delivery rose 0.2 percent to $1,633.85 an ounce today.