The hike in import duty comes into effect from May 13.
Among jewellery stocks, Titan Company shares were trading flat with a negative bias at ₹4,053.80 apiece on the NSE, while Kalyan Jewellers India slipped up to 5.87% to ₹340.55. Senco Gold was trading 0.56% lower at ₹310.70, and Thangamayil Jewellery was trading nearly 3% lower at ₹3,562.20.
The higher duties could dampen demand in the world's second-largest consumer of precious metals, though they may help narrow India's trade deficit and support the rupee, one of Asia's worst-performing currencies.
However, according to media reports, industry officials warned that higher import taxes could revive smuggling, which had eased after India reduced tariffs in mid-2024.
The government has imposed a 10% basic customs duty along with a 5% Agriculture Infrastructure and Development Cess (AIDC) on gold and silver imports, taking the effective import tax to 15% from 6%.
"As expected, the government has raised duties to curb the current account deficit. However, this could affect demand, as gold and silver prices were already elevated," said Surendra Mehta, National Secretary at the India Bullion and Jewellers Association.
Prime Minister Narendra Modi on Sunday urged citizens to avoid gold purchases for a year to help protect foreign exchange reserves. India meets nearly all of its gold consumption through imports.
Impact explained
The government's decision to raise the effective import duty on gold and silver to 15% from 6% is expected to push domestic bullion prices higher and weigh on sentiment for jewellery stocks in the near term.
India imports most of its gold requirement, and a higher import tax directly increases the landed cost of the precious metal. As a result, domestic gold prices could rise further even if international bullion prices remain stable.
The move may also lead to higher domestic premiums and softer jewellery demand, especially as gold prices are already trading at elevated levels. Demand for gold coins and ETFs could also moderate over time if prices continue to rise sharply.
Higher domestic premiums mean gold in India may trade at a bigger markup compared to international prices.
Impact on jewellery stocks
Shares of listed jewellery companies could remain under pressure as higher gold prices may hurt discretionary spending and reduce consumer purchases.
Stocks likely to remain in focus include:
- Titan Company
- Kalyan Jewellers
- Senco Gold
- PC Jeweller
Jewellery stocks had already witnessed selling pressure earlier this week after Prime Minister Narendra Modi urged citizens to avoid non-essential gold purchases for a year to help conserve foreign exchange reserves.
Organised players may fare better
Analysts note that while the near-term outlook appears negative, large organised jewellers could eventually gain market share from smaller unorganised players.
Branded retailers are generally better placed to manage inventory costs and hedge against price volatility. In addition, consumers tend to prefer trusted and established brands during periods of sharp price swings.
Higher gold prices also increase the absolute value of transactions, which could support revenue growth for organised jewellery chains despite slower volume growth.
As a result, the near-term sentiment for jewellery stocks may remain weak; however, medium-term trends could favour larger organised players such as Titan Company and Kalyan Jewellers.
Which segments could benefit?
Gold financing companies and NBFCs, according to analysts, may see higher collateral values as gold prices rise.
Key details
India's gold imports surged more than 24% to an all-time high of $71.98 billion in 2025-26. In volume terms, however, the shipments dipped 4.76% to 721.03 tonnes in 2025-26.
The prices of gold have risen from $76,617.48/KG in FY25 to $99,825.38/KG in FY26.
In the national capital, the price of gold increased by ₹1,500, or nearly 1%, to ₹1,56,800 per 10 grams on Tuesday from Monday's closing level of ₹1,55,300 per 10 grams. Silver prices also advanced by ₹12,000, or 4.53%, to ₹2,77,000 per kg.
In the international market, spot gold slipped $42.33, or 1%, to $4,692.64 per ounce while silver fell 3.04% to $83.49 per ounce.
Gold import duty: How the rules have changed
The government in the 2024-25 budget had cut customs duty on gold to 6% to boost the domestic gems and jewellery industry, curb illegal smuggling, and bring down local prices.
India had, in 2022, raised gold import tax to 15% to check CAD (capital account deficit) amid a falling rupee due to the Russia-Ukraine war that began in February 2022.
India is the world's second-biggest gold consumer after China. The imports are largely driven by the jewellery industry.
What CEA said
Chief Economic Advisor V Anantha Nageswaran, on Tuesday, said that the ongoing West Asia crisis is a "live balance of payments stress test", with direct consequences for inflation, the current account, and the exchange rate.
BoP (balance of payment) is the difference between inflows into and outflows of foreign exchange from the country in a particular period of time.
The Indian rupee hit a record low of 95.63 against the US dollar on Tuesday.
Report by Upstox with inputs from PTI
Disclaimer: This article is purely for informational purposes and should not be considered investment advice. Please consult with a financial advisor before making any investment decisions.
