Jewellers strike enters tenth day, imports freeze.

A strike by jewellers to protest against a government levy entered its tenth day in most parts of India, bringing imports to a near standstill from the world's biggest buyer of bullion in the peak wedding season.

"We have called for an indefinite strike. We have sent our demand back to the government," said S.L. Jain, president of Chandni Chowk Jewellers' Association. "This has hampered our business."

The government has not yet acceded to the rollback demand.

Some jewellers called for an indefinite strike, which started from March 17. Jewellers in Mumbai and Gujarat, which contribute to about 70% of India's bullion trade, were striking on Monday, but yet to decide on going on an indefinite strike.

The government for the second time in 2012 doubled the import tax on gold bars, to 4% of value along with an excise duty of 0.3% on unbranded jewellery, raising the cost by more than Rs 1,000 per 10 grams.

Gold on the Multi Commodity Exchange traded at Rs 28,196 per 10 grams on Monday. The budget also proposed to levy 1% of tax collected at source for transactions valued at more than Rs 200,000.

India, which consumes about 900 tonnes of the yellow metal per annum, has not imported a single kilogram so far in March.

"All jewellers are shut, so there is no question of imports," said Prithviraj Kothari, president of the Bombay Bullion Association, who expects March quarter imports to be at 125-150 tonnes, down up to 55% from the year earlier period.

Imports for 2012 could fall to their lowest level in two years to 655 tonnes, a Reuters poll showed.

Last week's gold futures volumes on the Multi Commodity Exchange fell to its lowest level in a month and expected to fall further till strike continues.

"Jewellers used to hedge their sales actively. Since there are no sales, therefore there is no hedging," said Gnanasekar Thiagarajan, director with Commtrendz Research.

Gold volumes on the MCX fell 36% to 148,366 kilograms in the week ending March 25, a level last seen in late February.

Source : moneycontrol.com