The Union Budget for 2026-27 will be presented on February 1 to investors and consumers with great anticipation, as they will be looking for any new policies which could lead to changes in the taxation or regulation of precious metals in India. Over the past five years of Union Budgets, customs duties and government regulations have impacted the pricing and trading of gold and silver within India, which affects the demand and pricing domestically as India relies heavily on importing both these metals to meet its expectations.
Last year, the import duty on gold was reduced and the industry has expectation that the Union Budget will witness similar policies and possibly consider further calibrated reductions in the import duty for gold.
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High duties hike production costs
The cut in the import duty rate is a major goal for jewellers. Because India gets the bulk of its raw materials from abroad, the high costs associated with duties are driving the high cost of producing jewellery.
Industry experts believe that reducing the duty rate would reduce input costs, thereby allowing exporters the opportunity to offer products at lower prices to buyers. Over time, this would enable more Indian households to purchase jewellery at lower prices.
GST was also seen as another key issue that jewellers are concerned with. Jewellers expect that a reduction in GST from 3 per cent to around 1-1.25 per cent could potentially result in increased consumer purchasing, particularly given that recent record highs in gold and silver prices have resulted in consumers delaying their purchases of jewellery, thereby reducing the level of retail demand in the jewellery sector.
Exporters look for faster customs procedures
Exporters are looking for simpler and quicker customs procedures. Long clearances and lots of paperwork often delay shipments and increase costs. Making processes faster, using digital documents and focusing on risk-based inspections could help Indian jewellers compete better with global counterparts and meet tighter delivery schedules.
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Regulated EMI options
There is also more interest in regulated EMI options for small jewellery purchases. Clear and straightforward financing could make gold easier for households to buy, allowing retailers to keep steady sales despite higher prices without promoting excessive risk.
Mobilising household gold
Household gold, which has estimated reserves of approximately 24,000 tonnes, is another area of focus for mobilising new sources of gold supply. Policies promoting the recycling of old gold or the exchange of old gold for new gold will reduce India's dependence on imported gold, be sustainable and help to bring assets that are sitting idle into the formal economy.
In addition to pricing and taxes, the jewellery sector continues to call for increased investment in skill development, technology and export infrastructure. Improved training, modern manufacturing practices and more robust export clusters will improve productivity and create jobs while also increasing India's status as a global leader in jewellery manufacturing.
Implement GST, urge industry groups
Industry groups are urging the government to implement the GST Refund Scheme for tourists at key airports. By allowing international visitors to receive a GST credit when they purchase jewellery, it would invite more people to visit and shop in India, therefore generating an increased percentage of the global luxury retail marketplace.
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With all of the above, there will be lower costs for consumers, increased competitiveness for export businesses and additional long-term growth for the precious metal and jewellery industry in India. This makes Budget 2026 a very important moment in time for an industry at crossroads.
