Indian Precious Metal Refiners Pin Hopes on Union Budget 2026 for Duty Relief
As the Union Budget 2026 approaches, India's precious metal refining sector has articulated its key expectations from the finance minister, seeking crucial policy interventions to level the playing field against imports. The industry is advocating for relief from the current duty structure, which it argues disproportionately favors importers over domestic refiners, particularly through various free trade agreements.
Addressing the Duty Disparity Challenge
Samit Guha, Managing Director and CEO of MMTC-PAMP, highlighted the significant impact of the duty gap on the competitiveness of local refiners. He emphasized that the government is aware of this persistent issue, which has hampered the growth of the domestic refining ecosystem. "The whole precious metal refining sector has witnessed this disparity, especially through the SEPA route, between what we get as Dore versus what refined bullion is imported at," Guha stated, underscoring the structural imbalance.
He further pointed out that while bullion has been excluded from free trade agreements signed after SEPA, the industry remains hopeful that upcoming trade deals will continue to keep gold and silver out of concessional duty regimes. This exclusion is seen as vital to protecting domestic refiners from being undercut by cheaper imports.
Call for Targeted Policy Support
Guha stressed the need for targeted policy support to help India enhance its refining capabilities and increase the number of refineries accredited by the London Bullion Market Association (LBMA). He suggested that this could be achieved by offering input-linked incentives through duty differentials, either under new trade agreements or by expanding the existing gap. "We would request the government to explore input-related benefits in terms of duty differentials... which will encourage local refiners to invest in refineries, achieve returns on investment, and elevate their refining capacity and capability to a global level," he elaborated.
Current Duty Structure and Import Trends
Currently, imports of dore—the semi-processed form of precious metals—attract a duty of 6% for both gold and silver. Refiners receive a differential of 0.65%, bringing the effective duty rate down to 5.35%. However, this structure still leaves domestic players at a disadvantage compared to refined bullion imports under certain agreements.
MMTC-PAMP, which primarily imports gold in dore form for refining, reported a shift in import patterns. Traditionally, gold and silver imports maintained a 1:1 ratio, but in the 2024–25 financial year, the company imported approximately 40 tonnes of gold and 50 tonnes of silver. During the April–December period of the current fiscal year, imports stood at 36 tonnes of gold and 60 tonnes of silver, indicating robust demand for silver, as noted by Guha.
Broader Implications for the Sector
The refiners' demands come at a critical juncture as India aims to strengthen its position in the global precious metals market. By addressing duty disparities and providing incentives, the government could potentially boost domestic refining capacity, reduce reliance on imports, and create a more self-sufficient ecosystem. The upcoming Budget 2026 is viewed as a pivotal opportunity to implement these changes, fostering growth and competitiveness in a sector vital to India's economy and jewelry industry.
