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Shares of Titan Company Ltd. and Kalyan Jewellers India Ltd. were trading with gains of up to 4% after the Union Budget 2026 allayed fears of a customs duty hike on gold.
Basic customs duty on gold had already been sharply reduced from 15% to 6% in the July 2024 Budget, a move aimed at curbing smuggling and improving affordability. The prevailing levy comprises the basic customs duty along with applicable surcharges.
With Finance Minister Nirmala Sitharaman presenting her ninth consecutive Union Budget in the Lok Sabha on February 1, investors and consumers closely tracked policy signals that could influence precious metals and the jewellery sector.
A higher customs duty on gold would have been a near-term negative for jewellery companies, as it typically dents demand and disrupts pricing dynamics in the immediate quarter.
However, industry participants have historically observed that such an impact tends to reverse quickly, with the subsequent quarter often turning sharply positive due to inventory gains as gold prices adjust upward.
A similar pattern was seen earlier when duties were cut, while sentiment initially improved, margins came under pressure over the next two quarters as price benefits normalised and competitive pressures intensified.
Against a backdrop of elevated gold prices, shifting global supply chains and rising trade barriers, industry stakeholders believe that targeted policy support could materially aid growth, exports and employment in the sector.
Rationalisation of import duties
One of the key expectations from the Budget was the rationalisation of import duties on essential raw materials such as gold, silver, platinum and coloured gemstones.
Given India's heavy reliance on imports for these inputs, higher duties directly inflate manufacturing costs and erode export competitiveness.
Industry participants have long argued that revisiting the duty structure would help lower input costs, improve pricing flexibility for exporters and enable Indian jewellery manufacturers to compete more effectively with global peers.
Ahead of the Budget, the Gem & Jewellery Export Promotion Council had urged the government to further reduce import duties on gold, silver and platinum from the current 6%. The council said that such a move would help manage historically high prices, curb smuggling and support consumer demand.
It also recommended lowering GST on gold to 1.25% and introducing a tax refund scheme for tourists to enhance India's global competitiveness in the jewellery trade.
Basic customs duty on gold had already been sharply reduced from 15% to 6% in the July 2024 Budget, a move aimed at curbing smuggling and improving affordability. The prevailing levy comprises the basic customs duty along with applicable surcharges.
With Finance Minister Nirmala Sitharaman presenting her ninth consecutive Union Budget in the Lok Sabha on February 1, investors and consumers closely tracked policy signals that could influence precious metals and the jewellery sector.
A higher customs duty on gold would have been a near-term negative for jewellery companies, as it typically dents demand and disrupts pricing dynamics in the immediate quarter.
However, industry participants have historically observed that such an impact tends to reverse quickly, with the subsequent quarter often turning sharply positive due to inventory gains as gold prices adjust upward.
A similar pattern was seen earlier when duties were cut, while sentiment initially improved, margins came under pressure over the next two quarters as price benefits normalised and competitive pressures intensified.
Against a backdrop of elevated gold prices, shifting global supply chains and rising trade barriers, industry stakeholders believe that targeted policy support could materially aid growth, exports and employment in the sector.
Rationalisation of import duties
One of the key expectations from the Budget was the rationalisation of import duties on essential raw materials such as gold, silver, platinum and coloured gemstones.
Given India's heavy reliance on imports for these inputs, higher duties directly inflate manufacturing costs and erode export competitiveness.
Industry participants have long argued that revisiting the duty structure would help lower input costs, improve pricing flexibility for exporters and enable Indian jewellery manufacturers to compete more effectively with global peers.
Ahead of the Budget, the Gem & Jewellery Export Promotion Council had urged the government to further reduce import duties on gold, silver and platinum from the current 6%. The council said that such a move would help manage historically high prices, curb smuggling and support consumer demand.
It also recommended lowering GST on gold to 1.25% and introducing a tax refund scheme for tourists to enhance India's global competitiveness in the jewellery trade.
