India’s jewellery industry has once again entered a phase of uncertainty after the Government of India increased the import duty on gold and silver from 6% to 15%. The move, announced amid rising geopolitical tensions and pressure on India’s foreign exchange reserves, is expected to have a major impact across the entire gems and jewellery ecosystem  from manufacturers and retailers to consumers and exporters.

For an industry that heavily depends on imported precious metals, this sudden jump in duty is more than just a taxation change it could reshape pricing, consumer behaviour, market demand, and even the structure of the industry itself.

Why Did the Government Increase the Duty?

The government’s primary objective behind increasing the customs duty is to reduce non-essential imports and protect India’s foreign exchange reserves. Gold imports alone crossed nearly USD 72 billion in FY 2025–26, putting immense pressure on the country’s trade deficit and the weakening rupee.

The revised structure now includes:

• 10% Basic Customs Duty (BCD)
• 5% Agriculture Infrastructure and Development Cess (AIDC)

This takes the effective import duty on gold and silver to 15%, compared to the earlier 6%.

The move comes during a period of global instability, rising oil prices, and ongoing tensions in West Asia, all of which are affecting India’s external economic balance.

Immediate Impact on Jewellery Prices

The most visible effect will be a rise in jewellery prices.

Since India imports the majority of the gold and silver it consumes, higher import duties directly increase the landed cost of precious metals. This additional cost eventually reaches the end customer.

For example:

• Earlier, gold worth ₹1,00,000 attracted approximately ₹6,000 in import duty.
• Under the new system, the same quantity could now attract nearly ₹15,000 in duty.

This means a direct increase of around ₹9,000 per ₹1 lakh worth of imported gold before GST and making charges are even added.

Silver jewellery, sterling silver accessories, and custom silver products are also expected to become more expensive due to the same duty increase on silver imports.

Impact on Consumer Demand

India’s jewellery demand is highly emotional and culturally driven, especially during weddings and festivals. However, higher prices can still slow down discretionary purchases.

Consumers may:

• Delay jewellery purchases
• Shift toward lightweight designs
• Prefer lower-carat jewellery
• Exchange old jewellery instead of buying new
• Increase interest in imitation or fashion jewellery

Industry experts believe jewellery volumes may decline in the short term, especially in the mid-market and price-sensitive segments.

At the same time, investment demand for gold may remain strong because many Indians still consider gold a safe asset during economic uncertainty.

Pressure on Jewellery Brands and Retailers

For jewellery businesses, especially MSMEs and growing brands, the impact could be significant.

Higher Working Capital Requirements

Jewellers now need more capital to purchase the same quantity of gold or silver. This creates cash-flow pressure, particularly for smaller manufacturers and retailers.

Reduced Profit Margins

Brands may struggle to fully pass the increased costs to customers immediately. Many retailers could temporarily absorb part of the price rise, affecting profitability.

Inventory Challenges

Businesses holding lower-cost inventory may benefit temporarily, but replenishing stock will become far more expensive.

Slower Sales Growth

High-value jewellery purchases may slow down, affecting festive season demand and wedding collections.

Stock market reactions already reflected industry concerns, with shares of major jewellery companies witnessing declines after the announcement.

Impact on Silver Jewellery Industry

The silver jewellery segment, which has been growing rapidly among Gen Z and young consumers, may also feel the pressure.

Sterling silver brands focusing on:

• Charms
• Minimal jewellery
• Custom accessories
• Trend-based collections

could see:

• Increased production costs
• Higher retail prices
• Pressure to optimise designs and weight
• Greater demand for affordable silver alternatives

However, silver may still remain relatively more accessible compared to gold, which could help the segment continue growing despite the challenges.

Risk of Increased Smuggling and Grey Markets

One of the biggest concerns raised by industry experts is the possible return of gold smuggling.

India has historically seen illegal gold imports rise whenever customs duties become excessively high. Interestingly, smuggling had reduced after the government cut duties in 2024, but experts now fear the reverse trend may begin again.

Higher duties create a large price gap between international and domestic markets, making illegal imports financially attractive.

This could:

• Hurt organised jewellery businesses
• Increase unfair competition
• Reduce government tax collections
• Create risks for consumers purchasing unverified jewellery

Impact on Jewellery Exports

India’s gems and jewellery export sector may also face difficulties.

Exporters rely heavily on imported raw materials. Higher duties can:

• Increase operational costs
• Block working capital
• Reduce international competitiveness

Industry bodies have already expressed concerns that exporters may struggle with increased bank guarantees and financing pressure due to the higher duty structure.

Long-Term Industry Adaptation

Despite the challenges, the Indian jewellery industry is known for adapting quickly.

Over time, brands may respond by:

• Focusing more on lightweight jewellery
• Promoting silver and alternative precious metals
• Increasing recycling and exchange programs
• Expanding lab-grown diamond collections
• Improving inventory efficiency
• Creating affordable luxury collections

Consumer preferences may also gradually evolve toward design-driven jewellery rather than purely weight-driven purchases.

Final Thoughts

The increase in gold and silver import duty from 6% to 15% marks a major shift for India’s jewellery industry. While the government’s goal is to protect foreign exchange reserves and stabilise the economy, the move will inevitably increase prices and create short-term challenges for jewellers, manufacturers, exporters, and consumers alike.

However, India’s emotional connection with jewellery  especially gold and silver remains deeply rooted in culture, tradition, and investment sentiment. The industry may face temporary slowdowns, but innovation, design evolution, and changing consumer trends will continue to shape its future.

In many ways, this phase may push jewellery brands to become leaner, smarter, and more design-focused than ever before.