The recent row regarding extra one percent tax on gold by GoI has left jewellers and artisans in a fix. Syed Asma talks to valley based jewellers who fear new norms will only add to the crisis
Barely out of her teens Saima Jameela, a law student, aspires to be independent and earn for her family. An orphan, Saima wants to settle down quickly so that she can take responsibility of her mother and specially-abled bother.
“I know getting a government job is impossible, so I planned to start a jewellery outlet,” says Saima.
After completing formalities including inspection Saima’s dreams got dashed when union Finance Minister Arun Jaitley announced one percent excise duty on gold from this financial year.
And since then (March 2, 2016) goldsmith and the other workers associated are on an indefinite strike.
Interestingly, same proposal was moved in the parliament by UPA government in 2012, but BJP opposed. For 21 days gold merchants across India went on a strike forcing UPA government to roll back the proposal.
The present strike against one per cent excise duty has significantly affected metal business across India.
Reportedly, March 2016, imports are estimated to have fallen to a new 29 month low of 12 to 15 tonnes.
With 80 per cent of the jewellers on strike, the gold import bill is estimated in the range of just $ 600 to 700 million.
Such low import values were seen in 2013, when the government had imposed restrictions on inward shipments of gold. In that period, imports were between 10 and 12 tonnes.
In Srinagar, the retail gold business had a loss of almost 15 crore in last 38 days.
Downplaying the crisis Arun Jaitley while justifying his stand said, “I want to make it clear that when tax imposes on items of common people and the society runs through tax, then it’s not justified to keep luxury items aside from tax.”
For last more than a month goldsmith and artisans associated with the trade are out of work.
“I knew I will have to face challenges but this is an unexpected one and seems to be unending,” says Saima.
So far Saima has invested around Rs 2 lakh [of the loan money] in purchasing half of the required machinery. The bank will release rest of the amount once the strike ends.
Once her shop starts functioning Saima, who is perhaps the long lady jewellers in Srinagar, will participate as a trained artisan alongside her workers. “I picked up the traits of the trade while working with artisans in a local workshop,” says Saima.
Saima, who was quite young at the time of her father’s death, managed her family’s expenses by renting 90 percent of her house to non-locals. “Living in Rajouri Kadal has its advantages as it attracts hundreds of artisans working in gold workshops. Most of them are living as tenants at our house,” says Saima. Rajouri Kadal, in the old city, is adjacent to the den of the goldsmiths Saraf kadal. These artists gave Saima the exposure and opportunity to learn the art.
“Most of our tenants are from Kolkata,” says Saima, who speaks fluent Bengla. “They are living with us since last 25 years.”
But with goldsmiths out of work since tax crisis, a number of Saima’s tenants are leaving Kashmir. “It has been over one month since we earned anything,” says Pawan, an artist from Maharashtra who is in Kashmir since early 90s. “We don’t have that much of savings that can help us survive for months without work.”
Pawan and hundreds of non-local artisans like him earn their living by cleaning the metal with acid, cutting and moulding it into shape. Around eleven thousand artisans, both locals and non-locals are currently associated with this trade in Srinagar.
Caught in crisis, Saima is trying her best to convince her tenants to stay back, assuring them that the worst will be over soon. But all in vain!
“The industry norm in vogue offers reasonable pay to artisans only after they work consistency for at least three years,” says Pawan. “The worst victims of the crisis are the artisans.”
Industry experts believe that the present crisis is largely because of jewellers past bad experiences with enforcement agencies.
“We already 10 percent import duty, but the gold is purchased in bars and has no identification number,” says Mohammed Iqbal, general secretary of a gold association, Srinagar.
“Once received by the distributors these bars are divided into small pieces and thus loses their identity,” says Iqbal. “After present tax rule, we will end up paying tax on the same bar again and again.”
New directives by GoI will bring goldsmiths with more than Rs 6 crore per annum sales under one percent excise duty ambit. “We are apprehensive that this will bring some artisans under tax slab as well,” says Iqbal.
There are other fears as well among valley based jewellers as they feel the new policy will end up encouraging corruption.
“We used to pay the excise duty till 1980’s,” says Ghulam Mohammed, 80, who has been drawing designs on gold and silver ornaments since last sixty years.
“When I was young excise inspectors would visit us on weekly basis asking for Rs 100,” says Mohammad. “They (inspectors) had powers to cancel our licenses at will. They exploited that authority. I fear the same will happen again.”