2026 Budget: Indian jewelry industry seeks duty cuts, GST relief
What's the story
The Indian bullion and jewelry sectors have urged the central government to introduce key policy reforms in the upcoming Budget. The stakeholders have called for rationalizing duty and tax structures to ensure fairness, competitiveness, and long-term sustainability of these industries. Prithviraj Kothari, MD at RiddiSiddhi Bullions Ltd and President of the India Bullion and Jewellers's Association Ltd., stressed on three major policy demands from the Indian bullion industry.
Policy demands
Stakeholders seek equitable customs duty benefits
Kothari highlighted the need for equitable customs duty benefits under the Tariff Rate Quota (TRQ) framework and Free Trade Agreements (FTAs) like CEPA with UAE. He said while Dubai imports around 180 tons of gold a year with a 1% duty advantage, gold dore bars imported into India only get a 0.65% benefit. This imbalance could lead to a sharp decline in dore imports, he warned.
Import adjustments
Proposal to raise duty on dore bar imports
To correct this imbalance, Kothari proposed raising the duty on dore bar imports from 0.65% to 1.65%. He also suggested reducing the basic customs duty on gold from 6% to 4% to create a more level-playing field for domestic industry and curb misuse of FTAs. Further, he urged simplification of gold mining regulations in India and allocation of funds for domestic gold production enhancement.
Market resilience
Consumer demand remains resilient amid price volatility
Suvankar Sen, MD and CEO of Senco Gold Ltd, said despite gold and silver price fluctuations, consumer demand in India has remained strong but more budget-conscious. He suggested initiatives like regulated small-ticket EMI options for gold jewelry and a review of the current 3% GST structure could ease consumer burden and encourage formal market participation.
Market trends
Old gold exchange gaining traction
Sen also noted the growing traction in old gold exchange, which now accounts for nearly 45% of transactions. He said with India's household gold holdings of nearly 24,000 tons, continued policy focus on innovative mechanisms to mobilize physical gold can unlock significant long-term value for the economy. Namita Kothari, founder at Akoirah by Augmont, stressed the importance of strengthening the domestic market after recent tariff hikes led to a decline in India's gem and jewelry exports to the US.
Market clarity
Need for clear frameworks and domestic consumption measures
Kothari also emphasized the need for clear frameworks like BIS certification to formalize lab-grown diamonds and build confidence at every price point. She suggested measures that encourage domestic consumption, such as reviewing capital gains taxation on jewelry, could support long-term participation and resilience. Colin Shah, MD of Kama Jewelry, stressed the gems and jewelry sector's importance to India's export ecosystem and global competitiveness.
Sector demands
Sector seeks tax rationalization and duty structure adjustments
Shah said the sector seeks a prudent mix of tax rationalization, duty structure adjustments, and greater operational flexibility to navigate current headwinds and sustain growth. He called for boosting exports and attracting FDI by creating a more predictable, low-tax regime for rough diamond miners selling in India. A stable, transparent tax environment for rough diamonds can significantly enhance supply chain efficiency and support downstream value addition.