Gold import volumes may drop 10-12% if duty rises, says Senco MD

Kolkata-based jewellery retailer Senco Gold MD and CEO Suvankar Sen believes a hike in import duty on gold could lead to a 10-12% drop in import volumes.

India's April gold imports were already at a multi-decade low after banks, which import most of India's refined gold, were hit by an unexpected tax demand.

Sen said India’s gold imports this year could fall to around 550 tonnes from the historical 700-800 tonne range.

Sen's comments come after Prime Minister Narendra Modi called on Indians to cut back on gold purchases, foreign travel and fuel consumption as rising tensions in West Asia threaten to push up India’s import bill.

Speaking at a rally in Hyderabad on May 10, Modi urged citizens to postpone buying gold and overseas travel for a year, while also encouraging greater use of public transport, electric vehicles and domestic products.

Gold remains one of India’s biggest import items, accounting for nearly 9% of the country’s total import bill. Since India imports more than 90% of its gold needs, any rise in purchases adds pressure on foreign exchange reserves and the current account deficit, especially when oil prices are also elevated.

However, Sen said a customs duty hike remains speculative for now, especially as India also faces commitments under global trade frameworks that encourage lower duties on gold.

The stock was trading at ₹340.70 at 9:17 am on the NSE and has declined more than 2% over the past year.

Sen said the industry has already seen a slowdown in jewellery-linked gold imports, with demand shifting more towards investment products such as bars, coins and ETFs.

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Citing industry trends and World Gold Council data, he noted that jewellery consumption and related imports have fallen, while investment demand has overtaken jewellery demand in recent quarters.

One of the key reasons the industry believes demand may remain resilient is the strong role of old gold exchange in purchases. Sen said nearly half of jewellery consumption in India is supported by consumers exchanging old jewellery rather than making entirely fresh purchases.

At the same time, Sen believes India should focus more on mobilising domestic gold reserves instead of depending heavily on imports. He pointed to thousands of tonnes of idle gold held in households and temples that could potentially

be brought into the formal economy and reused by the industry.

“The gold lying in our economy itself is a great resource, and we can reduce the import if we can use the gold lying in our economy,” he said.

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