More than 50% of India's million-plus gold industry workforce face a bleak future as high gold prices and heavy import taxes on gold have taken the sheen off the country’s insatiable hunger for the precious metal.
These artisans could soon become jobless if the government continues with its decision to discourage gold imports into the country, say retailers. Pritam Solanki, a bullion retailer from Mumbai said he was forced to cut down his employee complement to just 20 workers from the over 50 employees he had last year.
“Our orders have shrunk massively and it has become impossible to keep people on the rolls any longer. The high prices of the raw stock of gold and the high gold premiums have led to demand coming down from several quarters,'' he said.
He added that, earlier, his store would daily get jewellery orders of around 200 grams, especially in the middle of the year, now, over the last few months, this has fallen to just 25-30 grams.
Most of artisans and goldsmiths come to Mumbai from the eastern Indian state of West Bengal, with nearly a quarter of them moving back to their villages given the lack of jobs, said goldsmiths in Mumbai.
Bengal is the leader in hand made jewellery, followed by Coimbatore in the South and Rajkot, in Gujarat, said Samar Kumar De, committee member of the Gems and Jewellery Trade Federation. He pointed out that the government could prevent high net worth individuals from parking large funds in gold bars to improve the current account deficit situation. This would help cut down imports by around 75-150 tonnes per annum and ensure employment.
“Around 2 million skilled workers are employed in about 40,000 jewellery manufacturing units across one state. They face unemployment as their main raw material, gold, is fast depleting. The restrictions and the confusion regarding gold imports have been impeding raw material supplies to the units,'' says Haresh Soni, chairman of Gems and jewellery trade federation.
He adds that raw material stocks are drying up and that artisans are sitting idle in several units due to non-availability of the raw material.
The slowdown in the jewellery manufacturing industry has meant many artisans have sought alternative employment opportunities to feed their families, said M Jain of the Mumbai Jewellers Association.
Pankaj Parekh, vice chairman of the Gems and Jewellery Export Promotion Council noted that around 4.5 million artisans work in the jewellery manufacturing sector across the country. Of them, almost 1.5 million work for the export segment and 1 million workers tend to work on gold supplied by the grey market.
He added that between February and April, several jewellery units imported more gold than was needed, in anticipation of duty hikes and other restrictions from the government. The excess stock has pared down now, with most retailers exhausting their stock last month, forcing many companies to retrench workers en masse.
He said that the curbs in gold imports have been pushing the price higher and also encouraging smuggling, black marketing, hoarding and panic buying of the precious metal.
Industry estimates suggest that India's stringent strictures on gold imports has rendered jobles more than 500,000 gold artisans, craftsmen and salesmen across the country since June this year. Referring to the jobless figure, the All India Gems and Jewellery Trade Federation has said that India's stiff increase in import duty has worked adversely. ``While gold consumption increased, shortage was created due to slow supply,'' said regional chairman of the Federation Mitesh Khimji.
Among several recommendations sent across to the government, the Federation has encouraged unlocking domestic gold by introducing a disclosure scheme. With an estimated 2,50,00 tonnes of gold locked in Indian households, most of this could be made available to the artisans, rather than have the country indulge in pricey imports.
EASTERN INDIA
In West Bengal too, the government's curbs to control current account deficit, has hit the industry hard. Bachhraj Bamalwa, president of All India Gems and Jewellery Trade Federation said more than 10 million people were involved in the trade, since the majority of the work is handmade jewellery.
"It is a labour intensive industry. Millions of artisans are dependent on this sector for their livelihood. In the absence of any duty differential between articles of jewellery and primary metal, which was 8% in the case of gold jewellery and 4% in the case of silver jewellery in January 2012, there is an apprehension that Indian jewellery makers would not be able to compete with cheaper imports,'' he said.
He added that a majority of the imported jewellery was machine made. To protect the interests of small artisans however, customs duty on articles of jewellery and of goldsmiths’ or silversmiths’ wares was increased from 10% to 15% by the Finance Ministry recently.
However, Bamalwa states that the government's move to revise upward the customs duty on raw gold has nullified this incentive. The nodal agency for jewellers has warned that the ongoing supply shortage could result in more job losses in the sector.
Source:- mineweb.com
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