Indian jewelers have suspended until April 24 a strike that began March 2 in response to a proposed 1% excise tax on precious metal jewelry, local sources said Wednesday.
The market has been at a standstill for six weeks in an attempt to reverse the tax, announced by the government at its annual budget February 28.
"What we are hearing is that strike is off till April 24, thereafter they will take a call," a dealer source in Delhi said.
"The strike is off but the problems have not gone away," a second dealer said.
Markets in some locations were reported part open from Monday as it became increasingly clear strike action was unable to effect the government's decision and jewelers were losing large amounts of money, sources said.
Markets in the south of the country were said to have been open for a week or two, while the main centers in Ahmedabad, Delhi and Mumbai have remained largely shuttered.
Black market trading of gold has seen a large increase, sources said.
Imports of gold bars into India totaled 18.6 mt in March, down 22% on February to the lowest monthly inflow on record, Indian customs data showed.
Rising spot gold prices this year, up more than 15%, has kept physical demand subdued and discounts to the international price paid locally were reported as high as $40-$50/oz in February before the strike.
With the marriage season starting at the end of the month, which normally sees demand sharply increase across the country, many have called for an end to the strike.
Strikers were expected to put forward new proposals during the suspension until April 24.
The government, elected on a reform mandate in 2014, has attempted to curtail gold demand in a country almost entirely reliant on imports to meet consumption which is second in the world only to China.
The 1% jewelry excise tax is in addition to a 10% import tax introduced by the government two years ago, as well as schemes to encourage the purchase of paper over physical gold.
Gold represents about a quarter of India's current account deficit, with annual consumption around 800-900 mt.
Spot gold was trading just under $1,250/oz Wednesday morning, down over $10 from three-week highs Tuesday above $1,260/oz.
