'Gold duty hike to hurt jewellery trade and inflate prices, not cut imports,' say gems bodies

Mumbai/New Delhi: The gems and jewellery industry is likely to face challenging times ahead following the hike in gold import duty to 15 per cent, from 6 per cent earlier, a move that could spur the grey market, the All India Gems and Jewellery Council (GJC) said on Wednesday.

The Gem & Jewellery Export Promotion Council also said raising gold import duty does not curb imports but inflates prices, and urged the government to hold talks with industry stakeholders for sustainable solutions.

"Hiking import duties rarely curbs gold imports, it merely inflates prices. Despite gold prices doubling recently, imports have not declined proportionally," the council said in a statement.

"Business is now going to become difficult on the back of the Prime Minister's austerity measures and following the import duty hike in bullion. What the industry fears is that this will give rise to grey market... smuggling is likely to grow, setting up a parallel economy in the country," GJC chairman Rajesh Rokde told PTI.

Explaining the duty hike, Rokde said, now the import duty that includes Customs Duty, GST and Agricultural Cess will make gold costlier by around Rs 27,000 per 10 grams from the earlier Rs 13,500/10 gm.

He said the GJC has called an all-associations meeting of the industry in Mumbai on Wednesday to mull over the recent policy decisions and decide on further action.

Meanwhile, jewellery retailer Senco Gold and Diamonds MD and CEO Suvankar Sen said the import duty would remain high till the West Asia crisis remains. Moreover, crude oil prices will remain elevated till the time the oil supply chain becomes stable.

"So maybe for around one year it shall stay at these levels. 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 added.

The government on Wednesday hiked import duties on gold and silver to 15 per cent from 6 per cent as part of measures to curb inbound shipments of precious metals amid a rising import bill due to the West Asia crisis.

Prime Minister Narendra Modi on Sunday made a clarion call for curbs on gold purchases, along with other austerity measures to save on foreign exchange. The government has hiked the social welfare surcharge (SWS) and the agriculture infrastructure and development cess (AIDC), effective May 13.

The duty hikes will raise the overall customs duty on gold to 15 per cent.

India's gold imports surged more than 24 per cent to an all-time high of USD 71.98 billion in 2025-26. In volume terms, however, the shipments dipped 4.76 per cent to 721.03 tonnes in 2025-26.

'Higher duties fuel smuggling and raise export costs'

The Gem & Jewellery Export Promotion Council (GJEPC) said higher duties fuel smuggling and raise export costs, while exporters now face bank guarantees of Rs 28-30 lakh per kg of duty-free gold sourced from Nominated Agencies, severely blocking working capital.

The most severe impact would be on MSME manufacturers, who account for 80 per cent of GJEPC's membership and are facing a "critical liquidity crunch," it said.

The government on Tuesday raised the basic customs duty on gold to 10 per cent from 5 per cent and the Agriculture Infrastructure and Development Cess to 5 per cent from 1 per cent.

Acknowledging the government's decision, GJEPC said it had convened a meeting with major retailers and manufacturers and written to Prime Minister Narendra Modi outlining measures to curb gold imports.

These include promoting lower-caratage jewellery such as 18-karat and 14-karat to reduce imports by 20-30 per cent, encouraging old-gold exchange programmes, reviving the Gold Monetisation Scheme to tap India's estimated 25,000-tonne household gold stock, discouraging investment demand in bars, billets and coins -- which account for 20-30 per cent of total imports -- and providing special incentives for jewellery exporters.

The council said it is separately submitting a detailed paper on revitalising the Gold Monetisation Scheme to the government.

"GJEPC urges the government to engage in dialogue for sustainable solutions that align fiscal goals with export growth," it said.