Industry-Wide Sales Pause
Approximately 30,000 jewelers operating within Tamil Nadu have collectively decided to halt the sale of gold coins. This significant industry-wide action,
announced by the Tamil Nadu Jewellers Federation president B. Sabarinath, extends to ceasing the promotion of gold savings schemes and other customer-focused promotional offers throughout the state. This decisive measure stems directly from the recent, unexpected increase in import duties levied on gold jewelry. Furthermore, it's a response to apprehension voiced by Prime Minister Narendra Modi regarding the nation's foreign currency reserves. The federation's suggestion to its members to adopt this strategy is primarily aimed at mitigating the volume of gold being imported into the country, thereby contributing to a more stable economic environment.
Economic Pressures Mount
The decision to pause gold coin sales is deeply intertwined with a complex web of economic factors affecting the jewelry sector. As highlighted by the federation president, the import duty on gold was elevated abruptly, causing considerable market disruption. Adding to this uncertainty are persistent rumors of a potential increase in Goods and Services Tax (GST) on gold. The situation is further compounded by the Reserve Bank of India's substantial gold acquisition, reportedly 125 tonnes in the previous month, which influences market dynamics. Many jewelers rely on bank loans for their operations, and a curtailment of gold demand, which is now anticipated, could severely impact their ability to meet repayment obligations. This creates a precarious financial outlook for businesses across the state.
Price Surge and Impact
The immediate impact of the increased import duties is a dramatic surge in gold prices. In Coimbatore, for instance, the retail price of gold saw a substantial hike of ₹1000 per gram on Wednesday, May 13, 2026. This escalation is directly attributed to the government's decision to raise taxes by a significant 10%. The price on Tuesday stood at ₹14,400 per gram, but by Wednesday, it had climbed to ₹15,400 per gram. Notably, taxes alone now constitute a considerable ₹3,000 of this price. With the peak wedding season approaching next month, a period traditionally marked by high gold expenditure, the industry is now observing with bated breath how consumer spending habits will adapt to these elevated costs. Coimbatore alone boasts nearly 35,000 gold smithies, employing close to 1 lakh individuals, underscoring the widespread economic implications.
Sales Decline and Policy Suggestions
The gold market in Tamil Nadu has experienced a significant downturn, with sales reportedly falling by 60% over the past year. This steep decline is largely attributed to the volatile nature of gold prices, making it challenging for consumers to plan purchases. In light of these challenges, the jewellers' federation has presented a comprehensive roadmap to the government, proposing strategies to integrate approximately 25,000 tonnes of gold currently held by consumers into the formal financial system. Key suggestions include greater involvement of jewelers in gold monetization schemes. Additionally, the federation is advocating for an immediate ban on Exchange Traded Funds (ETFs) and digital gold sales, alongside stricter regulations on gold importers, channelling agents, and bullion dealers.
