Gold import duty hike: In an effort to reduce foreign purchases of the precious metals and relieve pressure on the nation’s foreign exchange reserves, the government raised import tariffs on gold and silver to 15% from 6%. As a result, shares of jewelry companies and bullion prices are anticipated to stay in focus on Wednesday, May 13.
The increase in import taxes takes effect on May 13.
Investors were keeping an eye on jewelry company shares and bullion prices on Wednesday, May 13, as the government raised import duties on gold and silver from 6% to 15% in an effort to reduce foreign purchases of the precious metals and relieve strain on the nation’s foreign exchange reserves.
Among jewelry stocks, Kalyan Jewellers India fell 5.87% to ₹340.55, while Titan Company shares were flat with a negative bias at ₹4,053.80 a share on the NSE. Thangamayil Jewellery was down over 3% at ₹3,562.20, while Senco Gold was down 0.56% at ₹310.70.
Although they might assist in reducing India’s trade deficit and stabilizing the rupee, one of Asia’s worst-performing currencies, the higher taxes could reduce demand in the world’s second-largest consumer of precious metals.
However, industry insiders cautioned that increased import levies might resurrect smuggling, which had decreased after India lowered rates in the middle of 2024, according to media reports.
The government increased the effective import tax from 6% to 15% by imposing a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess (AIDC) on gold and silver imports.
The administration has increased levies to reduce the current account deficit, as was to be expected. But since the prices of gold and silver were already high, this might have an impact on demand, according to Surendra Mehta, national secretary of the India Bullion and Jewellers Association.
In an effort to preserve foreign exchange reserves, Prime Minister Narendra Modi asked people on Sunday to refrain from buying gold for a year. India imports about all of the gold it uses.
Impact described
In the near future, it is anticipated that the government’s move to increase the effective import duty on gold and silver from 6% to 15% will drive up domestic bullion prices and negatively impact jewelry stock sentiment.
The majority of India’s gold needs are satisfied by imports, and a higher import tax immediately raises the precious metal’s landing cost. Therefore, even if global bullion prices stay steady, domestic gold prices might increase much more.
Given that gold prices are currently trading at high levels, the change may also result in lower demand for jewelry and higher domestic premiums. If prices keep rising quickly, demand for gold coins and ETFs may eventually decline.
India’s gold prices may be higher than those of other countries due to higher domestic premiums.
Effect on stockpiles of jewelry
Higher gold prices may impact consumer purchases and discretionary spending, which might continue to put pressure on shares of listed jewelry firms.
The following stocks are probably going to stay in focus:
- Titan Company
- Kalyan Jewellers
- Senco Gold
- PC Jeweller
Earlier this week, jewelry stocks were under pressure to sell after Prime Minister Narendra Modi asked people to refrain from buying non-essential gold for a year in order to preserve foreign exchange reserves.
Players who are organized might do better.
Although the short-term picture seems bleak, analysts point out that big organized jewelers may eventually overtake smaller, unorganized businesses in market share.
In general, branded retailers are in a better position to control inventory expenses and protect themselves against price fluctuations. Additionally, during times of significant price fluctuations, consumers typically favor reputable and well-known brands.
Despite slower volume growth, higher gold prices also raise the absolute value of transactions, which could help organized jewelry chains boost their revenue.
Because of this, the mood for jewelry stocks may continue to be negative in the short term, while larger organized companies like Titan Company and Kalyan Jewellers may benefit in the medium run.
Which market segments stand to gain?
Analysts predict that when gold prices rise, NBFCs and gold finance providers may see greater collateral values.
Key details
- In 2025–2026, India’s gold imports reached an all-time high of $71.98 billion, up more than 24%. However, in terms of volume, shipments fell 4.76% to 721.03 tonnes in 2025–2026.
- Gold prices increased from $76,617.48/kg in FY25 to $99,825.38/kg in FY26.
- From Monday’s closing level of ₹1,55,300 per 10 grams, the price of gold in the nation’s capital rose by ₹1,500, or almost 1%, to ₹1,56,800 per 10 grams on Tuesday. Additionally, silver prices increased by ₹12,000, or 4.53%, to ₹277,000 per kilogram.
- Spot gold dropped $42.33, or 1%, to $4,692.64 per ounce on the global market, while silver dropped 3.04% to $83.49 per ounce.
Import duties on gold: How the regulations have evolved
In order to support the domestic jewelry and gem industry, reduce illegal smuggling, and lower local costs, the government reduced the customs tariff on gold to 6% in the 2024–2025 budget.
In order to control the CAD (capital account deficit) in the face of a declining rupee brought on by the Russia-Ukraine war that started in February 2022, India increased the import tariff on gold to 15% in 2022.
After China, India is the world’s second-largest consumer of gold. The jewelry business is the main driver of imports.
What the CEA stated
The current West Asian crisis, according to Chief Economic Advisor V. Anantha Nageswaran on Tuesday, is a “live balance of payments stress test” with immediate implications for inflation, the current account, and the exchange rate.
The difference between foreign exchange inflows and outflows from the nation over a specific time period is known as the balance of payments, or BoP.
On Tuesday, the Indian rupee fell to a historic low of 95.63 versus the US dollar.
