Companies & Sectors
Economy & Nation Exclusive
Jewellers’ strike enters 17th day even as both sides continue to lose money

Jewellers across the country have suffered a business loss of around Rs14,000 crore while the revenue loss for the government comes to about Rs690 crore, due to the ongoing strike against the excise duty hike in Budget 2012-13

The ongoing indefinite nationwide strike by jewellers, demanding roll back in the excise duty announced in the Union Budget, is proving to be a costly affair not for the jewellers, but also for the government. On Monday, the strike entered into its 17th day.

In a statement, the All India Jewellers Association (AIJA), said, “…with continuous nationwide strike of 17 days, there is an estimated loss of business worth Rs14,000 crore resulting into a loss of custom duty revenue of Rs550 crores to the central government and about Rs140 crore loss has been caused to state governments on account of VAT.”
 
According to the Association, the government has fetched only Rs25 crore as tax from jewellers during the past 17 days. The Association has urged the government to act wisely and accept genuine demand of traders by rolling back the excise duty immediately.

“We do not mind paying taxes, but we will not pay any excise duty. What is the rationale behind (charging) it? The government will soon announce the Goods and Services Tax (GST), so there is no point in levying the excise duty and therefore we demand complete roll back of this (excise duty). Till then the strike will not be called off,” said Manish Jain, of Rajmal Lakhichand, one of the biggest jeweller in Maharashtra.

Sarafa bazaars (jewellery markets) in Delhi, Maharashtra, Gujarat, Punjab, Haryana, Rajasthan, Uttar Pradesh, Madhya Pradesh, West Bengal, Chhattisgarh, Tamil Nadu and in other states remained completely closed and no trading activities took place as markets wore deserted look, the AIJA said in the release.
 
To control the current account deficit (CAD) partly caused by the imports of gold and other precious metals in the first three quarters of this fiscal, the finance minister has proposed additional duties to limit the imports of gold and silver. Finance minister Pranab Mukherjee has proposed to increase import duty on gold to 4%, increase excise duty on branded and non-branded jewellery by 1%, 2% tax on cash sales of over Rs2 lakh, while removing the 1% excise duty on branded silver jewellery.
To protest against the hike, jewellers from across the country are on a strike since 17th March.

AIJA, in an earlier release said, “…the trade does not hesitate to collect and pay taxes in any other form like surcharge or cess but certainly not interested in becoming subject to one another department of excise. Already the trade is subject to numerous other taxes like custom duty, VAT, directly and several other taxes indirectly. Further, the traders are required to comply with other state and local self-government laws, rules and Acts.”

Measures announced in Budget 2012-13:

  • The Budget has proposed an excise duty of 1% on unbranded precious jewellery. 1% duty on branded jewellery existed earlier.
  • Increase in basic customs duty on standard gold bars; gold coins of purity exceeding 99.5% and platinum from 2% to 4% and on non-standard gold from 5% to 10%. Excise duty on refined gold is being increased in the same proportion from 1.5% to 3%.
  • In order to prevent round-tripping, it is proposed to impose basic customs duty of 2% on cut and polished, coloured gemstones at par with diamonds.
  • The Budget also proposed to levy 1% of TDS for transactions valued at more than Rs2 lakh. All such transactions must be backed by PAN details
  • Service tax of 12.5% levied on non-branded gold and jewellery. Even artisans and craftsmen come under the ambit.

User

COMMENTS

mr naresh kumar

6 years ago

i am naresh from hanuman garh ye sarkar aise nhi manegi. Hame kuch kathor kadam uthane padenge.

B V Vijaya BE CIS

6 years ago

You have mentioned the loss of 14,000 crores. But what about the gain in lks of crores what the Jewellers make in year. Profit & loss are part of a business & it need not be given undue importance unless it calls for.
Common man is not at all disturbed by this.
Gold is supplied by production in India itself, by smuggling which is a known fact, a portion is imported and by reselling by individuals. The impact of 4% rise is only for imported gold.
Media should give clear and right picture jto the public.

Vipul

6 years ago

Rather than giving reforms to the trade and industry, Mr finance minister has introduced hurdles. If govt wants revenue from this trade than
1. Might increase vat
2. Without tax stock registration with ST.
3. Remove precious metal from Mcx and stop speculation
4. No tax for first five years of business.
5. Easy and online billing of vat
many more but this govt seems to be either against various trades or doesn't know what to do but just roaming around the same old methods of hurdles.
We must learn from China which has emerges the strongest manufacturing hub and business centre. If atleast you can't work to curb inflation than please work to improve per capita income. Any business just doesn't feed an entrepreneur it feeds many other related to it.. Dear Govt.. All trades need reforms to rise our economy fro m silent and vicious recession..

vicki

6 years ago

With all due respects, it appears as though the "branded" and "corporate" jewellers are still functioning, at least in Delhi side, and the rest are also dealing with their old family customers.

A "strike" by shop-keepers is not likely to really succeed in the long term.

Economy & Nation Exclusive
Mumbai has sunk Rs275 billion in land since 2005

The paradox of the situation is that despite sitting on such massive money resources, Mumbai is unable to generate funds to finance its most essential requirements

According to a report by Jones Lang LaSalle, Mumbai’s realty and infrastructure situation now needs a serious boost. The city has invested Rs 275 billion in land since 2005, and the city needs a similar amount of in within five years to only complete the infrastructure projects that are underway.

“The city of Mumbai needs additional investments of about Rs275 billion in the infrastructure sector over the next five years if these projects are to be completed on schedule. This is equal to the amount that the city has buried in its land. The paradox of the situation is that despite sitting on such massive money resources, Mumbai is unable to generate funds to finance its most essential requirements. This would be an apt time for the authorities and policy makers to focus on breaking this deadlock,” says Subhankar Mitra, head-strategic consulting (West) Jones Lang LaSalle India.

He also says that most of the investments in land, particularly in South Mumbai, have actually remained non-yielding. Incidentally, South Mumbai is the area where maximum investments were made. Investors have not been able to fully monetize their investments and the end users have faced spiralling price rises despite economic slowdowns. Add to that, with the change in DCR (Development Control Rules), both the builders and customers have been left in the limbo.

In 2005, when FDI in real estate was enabled, Mumbai saw many high profile land deals and since then, many projects have been launched. Apart from the recorded transactions amounting to Rs 276 billion; there are unaccounted investments made in slum rehabilitation and redevelopment projects—which can amount to another Rs100 billion. 2008 saw an exemplary rise in investments in South Mumbai, says the report.

However, the city has managed to launch 2.5 lakh of residential units in the last five years—and all of them are yet to be completed. The report says that quantum of investments in mega infrastructure projects amounts to only 60% of the investments made in prime land in the city, approximately in the same period.

In other words, Mumbai needs to beef up its infrastructure, and fast. But the realty situation does not look very bright either. Sky-high prices are putting off buyers, and the developers are also confused with the new DCR. The proposed hike in stamp duty of leave-license agreements will also dampen the spirit of those who want to rent an apartment. Read Maharashtra Stamp duty hike: “Neither can you afford to own a home, nor take it on rent”

Pankaj Kapoor, MD, Liases Foras, however, finds it surprising that such a huge amount has been invested in land; because the RBI (Reserve Bank of India) does not allow foreign direct investment (FDI) in buying land. “What this money has done is that it has created speculation; and has created unproductive land values. If you check builders’ balance sheets, they are burdened with debt”, he said. “Residential realty does not really need money—and no amount of money will solve the problem. It needs sales; but the prices are too high. Instead of getting more money, builders should make housing affordable,” Mr Kapoor said. As of December, more than one lakh housing units remain unsold in Mumbai.

User

COMMENTS

Ramchandran

6 years ago

The prices are just not budging , the market is stagnant now .It seems people are more interested in getting into old building/properties rather than getting into an unpredictable zone of under construction & redevelopment projects.

Economy & Nation Exclusive
MNCs are big boys; they don’t need the US to front for them

The US government has always been a mouth-piece of American big business. That is why the protest of US commerce secretary John Bryson against India giving a compulsory licence to Natco Pharmaceuticals to produce a generic version of a patented anti-cancer drug leaves a bad taste in the mouth

Granted, it has been a unipolar world since Mikhail Gorbachev made it so, though Ronald Reagan took credit for defeating the "evil empire". Granted, the US can now justifiably claim the post of the world's big and only policeman.

In an ideal world, one of the roles of the policeman is to protect the poor from the predators (please don't laugh; it happens sometimes.) That is why the protest of US commerce secretary John Bryson against India giving a compulsory licence to Hyderabad-based Natco Pharmaceuticals to produce a generic version of a patented anti-cancer drug leaves a bad taste in the mouth.

The government has allowed Natco to produce a generic version of Bayer's patented cancer drug called Nexavar. This will bring down the price of the drug by 97%. Natco will sell the drug at around Rs8,880 for a month's therapy of 120 tablets against Rs2.8 lakh charged by Bayer. Experts say that this decision paves way for cheaper drugs in several other areas.

The US government has always been a mouth-piece of American big business. A large portion of its diplomatic effort is aimed a protecting "big, vulnerable MNCs" from the depredations of "poor, small, bad wolves" protecting the poor in their countries.

Therefore it was no surprise when commerce secretary Bryson repeated, almost word to word, Bayer's arguments against India granting the compulsory licence to Natco.

Mr Bryson told Anand Sharma that India's action would discourage new investments in drug R&D (research and development) and dilute the international patent regime. He said "pharmaceuticals is a very competitive area and heavy investments went into research and development every year. Any dilution of the international patent regime is a cause of deep concern for the US". Considering the tremendously cheaper price at which Natco will supply the drug, the US commerce secretary's words leave a bad taste in the mouth.

Now, let us take a look at this news item reported by Sky News, the British television channel.

A man suffering from the deadliest form of skin cancer told Sky News how a new drug brought him back from the brink of death. Charlie Jones woke up two weeks ago from emergency surgery on tumours that had spread to his kidneys to be told he had a matter of hours to live.

But doctors at the Christie Hospital in Manchester decided to try out a drug called Vemurafenib that has only just become available. To their amazement, his response was almost immediate. He is now much better and has returned home.

"Since I've been taking the drug I have been getting stronger and stronger," he said. "I'm getting colour in my face. My body is feeling a lot better. It's helping me feel like the old me."

Charlie and his girlfriend Louise Howard now hope to get married.

The drug is expected to be supplied to other cancer patients through Britain's National Health Service (NHS), which means it will be practically free.

Doesn't this make us all feel better and take away the bitter taste left by the US commerce secretary's words?

 (R Vijayaraghavan has been a professional journalist for more than four decades, specialising in finance, business and politics. He conceived and helped to launch Business Line, the financial daily of The Hindu group. He can be contacted at rvij10@yahoo.com.)

User

COMMENTS

K B Patil

6 years ago

Mr. Shashibhushan, what about affordability. For argument's sake, let's assume that there are about 1 lakh patients in India who need to take this drug. At Bayer's price of Rs.2.8 lakhs per month, I doubt whether even 1% of the patients could afford it. At Natco's price (Rs.8880), at the minimum atleast a 1000 patients can be given the drug paying either from their own resources or through charitable hospitals, trusts etc. When it comes to money, all corporates take leave of their conscience. Hence, this talk of spending on R & D needs to be taken with a pinch of salt.
In Delhi, corporate hospitals were given land at concessional rates on the condition that certain percentage of beds be reserved for the poor. A sting operation by a TV channel revealed that almost all the hospitals violated this provision.

REPLY

Shashibhushan

In Reply to K B Patil 6 years ago

I am not claiming that all hospitals or pharma companies are very good and honest, but feel that they are as bad as the rest of society since they are made of people from the same.

I understand the angle of affordability but what about their investments? If companies know that their IPR won't be honored why would they think of launching new products in India at all? May be some model like capping profit to let's say 20% of their costs could be levied, which would take care of both sides. However, I am not sure how loopholes can be plugged in implementation of this.

In that case do you think we should file complaints against those hospitals or the hospitals near our houses who are violating the provision?

Shashibhushan

6 years ago

Thinking from pharma companies point of view, it takes millions of dollar investment for invention of a new drug molecule and its clinical trials before it can be made available in market for safe consumption by patients.

Pharma companies are not a charity and rather except for notable exceptions everyone in this world including you and me are in non-charity (business, job, etc). They why expect pharma companies to forgo returns that are used to cover up the expenses already incurred and earn out of their invention?

It may sound very insensitive, but its truth. Its good to talk about social justice and patients who cannot afford and that it is unfair, but as is said in the movie Lagaan: "so is life". Do you feel that the state (through tax collected from taxpayers) can ever subsidize for healthcare for each citizen forever in best way? Such things have been tried in West for sometime but they come with their own pitfalls and mounting financial deficits. Tell me, are you "personally" ready to pay say Rs. 10,000/- more in tax every year for medicine research? and then what about the cost of management of the process? I feel it is easy to sympathize and ask someone to sacrifice, but is completely different when it is our turn to sacrifice. I believe that eventually (I know the wait could be challenging) nature and markets (without govt. intervention) are great levelers.

The comments at this link express this perspective more precisely: http://www.themoneyquest.com/2009/12/ama...

REPLY

malq

In Reply to Shashibhushan 6 years ago

Dear Shashibhushan ji, your points are valid when seen from only one perspective - that of the pharma industry and the support industries therein (industries like soft drinks, narcotics, tobacco et al) who provide the "push" for people to head for the said pharma industries.

The economies of the Indian Ocean have suffered enough because of the western economies, and a wee bit of payback is not out of place.

Best/VM

Shashibhushan

In Reply to malq 6 years ago

Dear malq ji,

My only relationship to pharma industry is as a customer. Till date by god's grace I have the privilege to afford medicines for the common problems faced in our family, but try to do my bit to help not so privileged.

I am aware that there are paybacks in various forms and they are huge. Also, I agree that preventive medical care - exercise, diet and lifestyle modifications is the true solution to the problem.

However, I could not imagine no role for medicines in today's world and also how pharmaceutical companies would find incentive to invest millions to invent drugs that treat the ill if their return is not assured through intellectual property protection laws.

malq

In Reply to Shashibhushan 6 years ago

Shashi ji, it is my humble submission that science and technology are for a greater good, including for mankind. Whether a pharma company "discovers" something today at a high cost or somebody else does it for free at a later/earlier stage, these are timelines, the basic premise does not change.

That's my main point.

The rest, that of big pharma using a push-pull model to motivate customers to come to them with disease, is also relevant.

rgds/VM

malq

6 years ago

Today, the biggest stake-holder in many mission critical American MNCs is the US Government - and vice versa also holds true. Their interests are common - and global domination at any costs is part of the basics of what is called the American way of life.

Other nations, and their interests, are co-lateral.

It doesn't get simpler than that!!

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Online Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Online Magazine)