Mumbai

The sharp increase in gold import duty has drawn concern from India’s gems and jewellery industry, with exporters warning that the move could raise costs, squeeze working capital, encourage grey-market activity, and increase smuggling risks.

All India Gems and Jewellery Council chairman Rajesh Rokde said the biggest concern is the possible growth of an informal parallel market.

According to Rokde, the revised duty structure—covering customs duty, GST, and cess—could push gold prices higher by roughly Rs 27,000 per 10 grams, making business conditions tougher for manufacturers, especially MSMEs that form the backbone of the sector.

He said the Council has convened an industry-wide meeting in Mumbai to assess the impact and discuss the way forward.

At the same time, Rokde said the industry respects the government’s decision and views the measure as a temporary response to current economic pressures.

Gem and Jewellery Export Promotion Council chairman Kirit Bhansali echoed similar concerns, saying higher duties historically have not significantly reduced gold imports but instead tend to inflate prices and block exporters’ working capital.

Bhansali warned that exporters now face substantially higher bank guarantee requirements for duty-free gold procurement, which could weaken India’s export competitiveness.

Avinash Gupta urged traders to avoid panic, noting that gold and jewellery remain deeply tied to India’s savings culture, traditions, and economic activity.

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The duty hike—from 6 per cent to 15 per cent—comes as the government seeks to curb precious metal imports amid pressure on foreign exchange reserves linked to the ongoing West Asia crisis. Prime Minister Narendra Modi had earlier appealed for restraint in gold purchases as part of broader austerity measures.