The Hindu Business Line : Jewellers face branding blues

THEY are perplexed. They've not thought of themselves as "branded" but Government provisions seem to say so. The imposition of two per cent excise duty on branded jewellery in the recent Budget has traditional jewellers wondering about the course of action they have to take. "Everything's in a state of flux. Nobody's aware of what's going on," says one of the proprietors of a well-known jewellery store in Chennai.

The Gold Club of Chennai, a jewellers' association, has written to the Finance Minister asking for a rollback of the excise duty. According to Mr Tushar Mehta, Chairman of the club, the "manner and tenor" of Mr P. Chidambaram's announcement implied that he only meant a "small crust" of jewellers. "His speech clearly identified two tiers - one which would pay the duty and one which would not. But the Central Excise rules say any mark on jewellery that identifies the jeweller with the product amounts to branding. Every self-respecting jeweller, anyone worth his salt, puts his initials on every piece of jewellery, for purposes of accountability and re-sale, so it's not clear," he says.

Further, in the case of a hallmarked product, the seals of the jeweller, assay centre, Bureau of Indian Standards and the year of checking are all put on the product, which is ample branding, says Mr Mehta.

Mr Chidambaram had said, "Expensive and premium jewellery is now manufactured and sold under alluring brand names. On such branded jewellery I propose to level an excise duty of two per cent. I may clarify that there is no levy on unbranded jewellery, including unbranded gold jewellery."

Most jewellers say they are brands, but not in the sense that the Finance Minister meant.

Mr Jitendra Vummidi, partner in Chennai's Vummidi Bangaru Jewellers, said, "My interpretation of branded jewellery would be that it's jewellery made by individuals but sold to outlets which brand it as their own."

As for the jewellers' initials that mark traditional jewellery, he says it's only for the purpose of identification. "Even a tailor will sew his label on to a shirt he stitches, does that make it branded?" he questions. He also says that the Minister's statement does not clarify what is meant by premium and expensive jewellery.

Mr Princeson Jose, Managing Director of Prince Jewellery, says jewellers in Tamil Nadu are waiting and watching the situation.

The Gold Club has sought an appointment with the Finance Minister due to the ambiguity in the provisions but jewellers in other States are already protesting , he added.

Mr Mehta, who is a Senior Trustee of Mehta Jewellers, says the two per cent duty will be very difficult to pass on to the consumers.

"The Indian consumer won't accept it. And it's very difficult for the trade to absorb; we operate on slim margins - it will make us non-competitive," he says. According to him, ever since the Gold Control Act was withdrawn in 1992, exports of loose, finished and made-up jewellery from India have been "galloping," and this has been contingent on the strong domestic base of production. This excise duty, if imposed, will affect exports too, he said.

Also, hallmarking, a practice of quality assurance that has just been catching up with consumers as well as traditional jewellers in the last three or four years, will lose its sheen now — it costs money to hallmark jewellery and promote it, say the jewellers.

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