As India raises gold import duty to 15%, leading jewellery players and trade bodies support gold conservation measures while warning of liquidity pressure, export challenges and rising risks to MSMEs.
India’s gems and jewellery industry has responded swiftly to the Government’s decision to raise the effective import duty on gold and silver to 15%, with leading trade bodies and organized retailers aligning with Prime Minister Narendra Modi’s call for responsible gold consumption while simultaneously cautioning against long-term industry disruption.
The revised duty structure, effective May 13, increases Basic Customs Duty (BCD) on gold imports to 10% from 5%, alongside a rise in Agriculture Infrastructure and Development Cess (AIDC) to 5% from 1%. The move comes amid mounting pressure on India’s current account deficit, foreign exchange reserves and rising geopolitical uncertainty impacting global trade flows.
The Gem & Jewellery Export Promotion Council (GJEPC) convened an emergency meeting with major retailers and manufacturers following the Prime Minister’s remarks encouraging restraint in gold purchases. The industry body subsequently submitted recommendations to the Government aimed at reducing dependence on imported bullion while strengthening domestic gold circulation.
Among the measures proposed are greater promotion of lower-carat jewellery such as 14K and 9K, expansion of old gold exchange programmes, discouragement of investment demand in gold bars and coins, and revitalization of the Gold Monetisation Scheme (GMS). GJEPC has also urged the Government to provide a supportive framework for jewellery exporters to continue earning valuable foreign exchange during a challenging economic phase.
At the same time, the council reiterated its longstanding position that higher import duties historically have not significantly curbed gold imports. Instead, GJEPC warned that elevated duties could increase smuggling activity, inflate jewellery prices and intensify financial pressure on exporters and manufacturers.
According to GJEPC, exporters are now facing substantially higher bank guarantee requirements for duty-free gold procurement through nominated agencies, creating additional working capital burdens. The organization stated that MSME manufacturers — which account for nearly 80% of GJEPC’s membership — are likely to face the most severe liquidity challenges under the revised duty structure.
Industry stakeholders have also raised concerns that prolonged high duties could impact export competitiveness at a time when global demand conditions remain uncertain.
Leading organized jewellery retailers have simultaneously announced initiatives focused on gold recirculation, recycling and monetization as alternatives to fresh bullion imports.
Malabar Gold & Diamonds has submitted a detailed proposal to the Government recommending reforms to the Gold Monetisation Scheme, including lower minimum deposit thresholds, flexible redemption options, simplified e-KYC procedures and increased participation from organised jewellers. The company stated that mobilizing even a small percentage of India’s estimated domestic gold holdings could significantly reduce import dependence over time.
Similarly, Kalyan Jewellers launched its “Nation First – Gold4India Initiative”, a four-pillar programme focused on old gold exchange, monetisation, grassroots awareness and wider adoption of 18K jewellery to optimise gold consumption patterns.
Senco Gold Ltd Managing Director and CEO Suvankar Sen highlighted that a large portion of jewellery consumption in India already functions through recycled gold and exchange-based purchases rather than fresh imports alone. He noted that nearly 50% of Senco’s business currently comes through recycled gold, while the company continues focusing on lightweight, 9KT, 14KT and 18KT jewellery categories.
The broader industry consensus currently reflects support for national economic priorities and responsible gold utilization, while also emphasizing the need for balanced policies that protect exports, preserve artisan employment and maintain liquidity across the jewellery manufacturing ecosystem.
Be the first to comment