Higher import duty on gold is likely to weigh on discretionary purchases and keep consumers with smaller budgets away from the market for a while, as an increase in tariffs will translate into a hike in retail prices, straining middle-class shoppers, industry executives said. They project a dip in sales volumes in the near-term.
However, given that gold jewellery is deeply rooted in Indian culture and is synonymous with weddings and festivities in many parts of the country, companies are hopeful that a broader slump in demand will be averted and essential consumption of the yellow metal will continue.
To get more consumers to the stores though, firms are planning to heavily push exchange programmes, enabling people to swap old gold for new. Most of India's local gold consumption is met through imports, which is why a rise in tariffs tends to have a bearing on prices. The country's gold imports increased to $72 billion in FY26 from $58 billion in FY25.
Impact on Consumer Sentiment
“An increase in import duty on gold typically has a direct impact on retail prices, which can influence short-term consumer sentiment, especially for price-sensitive buyers. In the immediate phase, some customers may choose to postpone discretionary purchases or wait for price stability before making decisions. It can lead to a volume degrowth of 10-15%,” said Suvankar Sen, MD & CEO at Senco Gold. Customers, particularly first-time buyers, will take a moment to recalibrate, said MP Ahammad, chairman at Malabar Group, adding that exchange of old gold for new jewellery, which already makes for a meaningful share of transactions at organised retailers, will become the dominant mode of purchase going ahead.
Long-Term Demand Outlook
“Jewellers are likely to pass on the hike in import duty to consumers, pushing up prices of gold ornaments. However, India's cultural and emotional affinity to gold, especially during weddings and festive seasons, continues to support long-term demand. Also, customers are increasingly viewing gold not only as an ornament but also as a trusted investment vehicle,” said Dr Joy Alukkas, chairman & MD at Joyalukkas.
Industry Initiatives
Kalyan Jewellers has launched a Gold4India initiative as part of which it is pushing consumers to exchange old, unused, broken or outdated jewellery and also buy more of 18K jewellery which requires a lower quantity of pure gold. Separately, the Gem & Jewellery Export Promotion Council (GJEPC) has asked its members to promote sales of lower caratage jewellery and discourage investments in gold bars and coins, which accounts for 20-30% of total imports.
