Jewellers and industry leaders on Wednesday said the hike in import duty on gold and silver could impact jewellery volumes in the short term, though demand is expected to remain resilient due to the yellow metal’s enduring cultural and investment appeal in India.
The Centre recently increased import duty on gold and silver, a move industry players said aimed at conserving foreign exchange reserves and promoting recycling and circulation of idle domestic gold.
The total duty, inclusive of agriculture cess and Integrated GST, has nearly doubled to 18.45 per cent to reduce forex drain, sector veteran Pankaj Parekh said. Senco Gold & Diamonds MD and CEO Suvankar Sen said the elevated duty structure may continue for around a year amid geopolitical uncertainties and high crude oil prices linked to the Middle East crisis.
“The duty would remain high till the Middle East crisis remains, crude oil prices remain high, and the oil supply chain becomes stable,” Sen said. “The volumes might get impacted by 10-15 per cent, but value-wise it will remain at a higher level. Consumers will buy lighter-weight jewellery,” he said.
Anjali Jewellers Director Annargha Uuttiya Chowdhuury said the government periodically reviews import duties in line with evolving economic priorities, and the latest increase may only have a limited impact on consumers.
“Gold in India continues to hold strong emotional, cultural, and investment value. Consumers planning fresh purchases are likely to maintain demand, particularly during weddings and festive occasions, viewing gold not only as an adornment but also as a long-term financial asset,” he said.
Chowdhuury added that higher duties may encourage organised gold recycling and strengthen the domestic circular gold economy, as a substantial portion of demand is already met through exchange and reuse of old gold.
Industry players also backed Prime Minister Narendra Modi’s appeal to conserve foreign exchange reserves by reducing dependence on imported gold. Kalyan Jewellers India Ltd said it has launched the “Nation First – Gold4India Initiative” in response to the Prime Minister’s appeal and aims to reduce gold imports by 5 tonnes during the current financial year by encouraging the circulation of idle domestic gold.
Kalyan Jewellers Managing Director T S Kalyanaraman said a stronger domestic recirculation ecosystem could sustain employment in the jewellery sector and help states preserve GST revenues from organised trade. “The initiative will strive to spark a behavioural shift in consumers, from viewing gold solely as a static asset preserved indefinitely, to recognising it as a renewable domestic resource capable of continuously generating economic value within the country,” he said.
Malabar Group Chairman M P Ahammad said the government’s move should be viewed in the context of strengthening India’s economic resilience and encouraging responsible use of domestic gold resources. He said that while higher duties may make consumers more value-conscious in the near term, demand linked to weddings, savings and cultural occasions would remain fundamentally strong.
Ahammad said exchange of old gold for new jewellery is likely to emerge as the dominant mode of purchase over the coming quarters, easing pressure on fresh imports without affecting consumer aspirations. He also reiterated the group’s proposal to strengthen the Gold Monetisation Scheme by making it easier and more rewarding for households to deposit idle gold and by integrating organised jewellers into the scheme’s customer-facing network.
Also read: Import duty on gold, silver more than doubled to support rupee
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