Thousands of shops Thursday shut down across India as jewellers began a three-day strike against the two percent excise duty on branded jewellery proposed in the budget.

Stores in Delhi, Gujarat, Rajasthan, Haryana, Punjab and Jammu and Kashmir remained closed and jewellers threatened that the stir could go on indefinitely.

Jewellery markets in several cities of Gujarat wore a deserted look.

In Rajasthan's capital Jaipur, more than 1,000 shops were closed.

"Jewellers in Delhi, Haryana, Punjab and Jammu and Kashmir have gone on a strike against the government's decision that would impact around 150,000 jewellers and 15 million artisans around the country," said Rakesh Saraf, general secretary of the Karol Bagh Jewellers Association, here.

"The decision is expected to affect not just the big players but also the small artisans who put a logo to mark their wares. Categorising these products as branded is unfortunate," Saraf said.

Industry representatives said the excise duty would hit exports and the emergence of branded products in the domestic gems and jewellery market.

"At a time when India is trying to establish itself as one of the leading branded jewellery makers in the world, this step comes as a major setback," said Bakul Mehta, chairman of the Gems and Jewellery Export Promotion Council, in Mumbai.

"If the government doesn't withdraw the proposal, we will be forced to pass on the tax burden to the consumers," Mehta said.

In Ahmedabad, Gujarat Jewellers Association president Jhaverbhai Jhaveri threatened that the state's jewellery markets would remain closed till the excise duty was withdrawn.

Rajkot's Gold Dealer Association president Balwant Badani said that market representatives would meet Finance Minister P. Chidambaram.

Jewellers in Jaipur staged a rally and were also planning to send a memorandum to Chidambaram.

Industry leaders in Delhi claimed that only 20 percent of India's jewellery market comprised branded products - around 25 domestic and international brands.

During the last calendar year, the total exports of the Indian gems and jewellery sector were $14.33 billion, a growth of around 38 percent from the previous year.

Exports in the jewellery sector registered a 78 percent growth year-on-year in 2004.

"The industry has been showing a very impressive growth. We were confident it would surpass the target of $16 billion by 2007," Mehta said.

"If the excise duty is not withdrawn, we will have to revise the growth target for the industry in the coming months," he added.

"We are not against the government generating additional revenue by imposing duties on any industrial sector, but it should not hamper growth in the industry," said Sanjay Kothari, a leading jewellery exporter, in Mumbai.