Jewellery stores across the nation have shut shop for the past four days to protest against the low duty levied on imported jewellery. In an interview to CNBC-TV18, Nilesh Parikh, chairman, Shree Ganesh Jewellery, explains the impact of the lowering of import duty on domestic demand and local manufacturing units.

Parikh concludes that though the organised sector might survive, the unbranded sector might adopt measures to beat the law.

Below is an edited transcript of the interview. Also watch the accompanying video.

Q: Is it correct, that while the customs duty on standard gold bars has been raised to 4%, the duty on jewelry is only 1%?

A: Unfortunately, yes. The duty on jewelry that can be imported is only 1% and there is a huge mismatch.

Q: Will this mean a flood of imported jewelry or will you lower making charges to survive?

A: We will manage by striking a balance between imports and manufacture. The impact is not going to be very large because most of the jewelry which is sold in India is manufactured locally.

Q: Do expect demand for international jewellery to fall? Will the sales of Indian jewellery companies be affected?

A: Of course, Indian jewellery companies are going to be hit very hard. But for those in the organised jewelry sector, the situation will not be too difficult.

Q: Is there going to be decline in gold and jewellery demand?

A: For gold, yes. And this is because there is a lot of gold in India which will be mobilised due to the 4% duty. The demand for locally made jewellery may also go down.

Q: What might be the impact on your own sales?

A: Most of our sales is from exports. We are an approximately 92% export oriented company. On the domestic front, we are already in the in excise net, so the growth is gradual. We don’t see much difference in sales.

Q: How would you expect the unbranded segment to respond to that 1% cess?

A: That’s very difficult to comment on. Since gold is so expensive, various trends may set it. But the organised sector will take no risks and heed the law.

Q: Do plan to speak to the government and industry organisations to reverse this inverted structure?

A: Yes, there is been a strong representation by the Gems and Jewellery Federation. Most jewellers have closed shop for the past four days in protest. But the federation is working on the problem and I hope something positive will come out.