Gold Import Duty Hike Sparks Concerns in Jewellery Industry

The jewellery industry braces for tough times as India's gold import duty climbs to 15%, a decision meant to curb imports amid a rising import bill due to the West Asia crisis. This policy may boost the grey market and challenges the industry as it faces possible reductions in volume.

The jewellery industry is grappling with a significant challenge as the Indian government raised the gold import duty to 15% from its previous 4%. This decision, announced by the All India Gems and Jewellery Council (GJC), is aimed at curbing the rising import bill exacerbated by the West Asia crisis.

GJC chairman Rajesh Rokde expressed concerns that the duty hike could drive growth in the grey market and smuggling, potentially setting up a parallel economy. The cost of gold is expected to rise significantly, with the new duty structure comprising Customs Duty, GST, and Agricultural Cess.

Jewellery retailers, including Senco Gold and Diamonds, predict that while volumes may drop between 10-15%, the overall value would remain high. Consumers might pivot to purchasing lighter-weight jewellery. The changes come amidst government efforts to reduce foreign exchange use through austerity measures led by Prime Minister Modi.