Ahead of the Union Budget 2026–27, leading jewellery retailers, manufacturers and industry bodies outline expectations on GST, import duties, exports, digital gold regulation, working capital, and policy reforms to strengthen growth.
With gold prices at record levels and export markets under pressure, India’s gems and jewellery sector is seeking tax rationalisation, regulatory clarity and policy stability in the Union Budget 2026–27. Rising costs, working capital constraints and compliance complexity are being flagged as key challenges impacting domestic demand, formalisation and global competitiveness.
The industry is looking for policy continuity that supports organised retail growth and sustains consumer confidence. Rationalisation of GST on gold and diamond jewellery, along with simpler compliance norms, is seen as critical to strengthening transparency and ease of doing business. Export-linked incentives and skill development across the value chain are also being viewed as essential to long-term sector growth and employment generation.
A challenging macro environment, currency volatility and higher working capital requirements are coinciding with record-high gold prices driven by global safe-haven demand and a weaker rupee. At the same time, the government’s push to monetise idle gold stock is being closely watched.
Clear regulation of digital gold is being sought to protect consumers and support market formalisation. Demand for natural diamonds continues to remain steady, while the BIS move to differentiate natural diamonds from lab-grown diamonds is being welcomed as an important step for consumer clarity. Consistent and forward-looking policies are being seen as key to reinforcing India’s position in the global gems and jewellery value chain.
Consumer demand remains resilient despite price volatility, reinforcing gold jewellery’s role as a long-term store of value. To support affordability, the industry is seeking small-ticket EMI options and a review of the 3 per cent GST rate.
With old gold exchange now accounting for nearly 45 per cent of transactions, there is also a need for policies to mobilise household gold. A review of the 6 per cent import duty, along with skill development, technology adoption and SEZ flexibility, is seen as critical to strengthening organised sector growth.
Domestic consumption remains the primary growth engine for the jewellery industry, making consumer demand the central macro priority. With inflation impacting household purchasing power, rationalisation of gold import duties, stable indirect tax structures and affordability-focused measures are expected to revive discretionary spending and generate a multiplier effect across the value chain.
Predictable policies, improved access to working capital, continued focus on skill development and incentives aligned with the Make in India vision are also being seen as essential for long-term planning and investment. Value-driven, lightweight and daily-wear categories such as mangalsutra are expected to play a key role in balancing tradition with evolving consumer preferences.
Sharp increases in gold prices over the past year have intensified structural challenges by raising the effective tax burden and locking up working capital, particularly for small and medium jewellers.
Key demands include GST rationalisation, simplified MSME compliance, regulation of digital gold, lower merchant discount rates and formal EMI options for hallmarked jewellery.
The council has recommended reducing GST on gold and silver jewellery from 3 per cent to 1.25–1.5 per cent, enabling refunds of accumulated input tax credit on services, clarifying the 5 per cent GST rate for job-work, allowing a one-year deferral of income tax on unrealised inventory gains, and granting capital gains tax exemption on reinvested hallmarked jewellery. These measures are expected to encourage formal transactions, support artisans and improve affordability.
With geopolitical uncertainty, U.S. tariff pressures and slowing demand in key markets, export competitiveness has emerged as a central concern. Duty rationalisation and procedural reforms are being positioned as critical to sustaining growth and protecting employment.
Key proposals include a liberalised tax regime for rough diamond trading in Special Notified Zones, rationalisation of import duties on cut and polished diamonds and coloured gemstones, and replacement of the fixed-rate duty drawback system with an ad-valorem mechanism linked to metal prices.
Additional recommendations cover extending duty drawback benefits to platinum jewellery and gold articles, introducing a comprehensive tax refund scheme for foreign tourists, enhancing operational flexibility for SEZ units, simplifying customs procedures through risk-based clearances, and extending duty exemption on lab-grown diamond seeds beyond March 2026. These reforms are being viewed as necessary to position India as a global diamond trading and value discovery hub.
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