Shares of major jewellery companies witnessed a sharp decline of up to 11% in early trade on May 13, 2026, following the government's decision to increase the import duty on gold and silver to 15%. The move, aimed at curbing the country's trade deficit and promoting domestic production, has raised concerns among industry players about a potential slowdown in consumer demand.
Impact on Stock Prices
Leading jewellery retailers and manufacturers saw their market capitalisation erode significantly. Titan Company, the market leader, fell over 8%, while Kalyan Jewellers and PC Jeweller dropped by 11% and 9%, respectively. Other players like Tribhovandas Bhimji Zaveri and Senco Gold also witnessed declines in the range of 6-10%.
Reason Behind the Duty Hike
The government announced the increase in import duty from the existing 10% to 15% effective immediately. This is part of a broader strategy to narrow the trade deficit, which has widened due to high gold imports. Officials stated that the higher duty would also encourage recycling of gold and reduce dependence on imports.
Industry experts believe that the duty hike will lead to higher retail prices, potentially dampening demand during the upcoming wedding season. However, some analysts argue that the long-term impact may be limited as consumers adjust to the new prices.
Reaction from Industry Bodies
The Gem & Jewellery Export Promotion Council (GJEPC) expressed disappointment, stating that the sudden hike could disrupt business operations and hurt exports. They urged the government to reconsider the decision or provide transitional relief. On the other hand, the Confederation of Indian Industry (CII) supported the move, citing benefits for domestic refiners and reduced current account deficit.
Market Outlook
Investors remain cautious as the sector faces headwinds from higher input costs and potential margin compression. The broader market indices also traded lower, with the BSE Sensex declining by 0.5% in early trade. Analysts recommend monitoring the impact on quarterly earnings and consumer sentiment before taking fresh positions.
