The Indian government has announced a reduction in customs duties on jewelry and platinum parts in the Union Budget for the financial year 2025-26. This move is expected to make jewelry, especially platinum pieces, more affordable for consumers, which could lead to higher demand.
How the Duty Cut Will Impact Prices
One of the biggest changes is the reduction of customs duty on platinum parts, known as ‘findings’, from 25% to just 5%. This sharp cut will make platinum jewellery more affordable, encouraging more consumers to purchase it. Similarly, the customs duty on jewellery has been lowered from 25% to 20%, making gold and other jewellery pieces slightly cheaper.
The Budget has also introduced a new tariff line to differentiate gold imported in bar form from gold brought in through other means. This change aims to create more transparency in gold imports and may help in better price regulation.
Jewellery companies see this duty cut as a step that will boost demand, particularly among middle-class buyers. Suvankar Sen, MD & CEO of Senco Gold & Diamonds, stated that the reduction in customs duties aligns with the government’s efforts to stimulate consumption and economic activity.
Executives from the recently listed PN Gadgil also shared similar views, stating that in a country like India, where jewellery consumption is traditionally high, lower prices due to reduced duties will encourage more people to buy jewellery. This, in turn, will benefit the overall industry, especially organized jewellery players.
Despite this positive move, it is important to note that the prices of precious metals like gold, silver, and platinum have already risen by at least 20% in 2024 due to geopolitical tensions, global economic events, and supply disruptions. Experts believe these prices may remain high in 2025, which could impact consumer sentiment.
The jewelry industry saw strong sales in the December 2024 quarter, driven by festive and wedding season demand. The government had already taken a step in July 2024 by reducing import duty on gold from 15% to 6% before the festive season, which helped boost sales. Now, with further reductions in customs duties, the government hopes to sustain this momentum and drive growth in jewelry consumption.
The formalization of the jewelry market in India has been growing, with more consumers preferring to buy from organized brands rather than unregistered or unbranded sources. The recent duty cuts will likely benefit organized jewelry companies the most, as they will be able to pass on cost savings to customers, making their products more attractive.
While the recent duty cuts are a welcome move, industry experts believe that further reductions in duties could provide an even stronger push to the jewellery market. Lower duties would help keep jewellery prices competitive, encouraging more people to buy, and supporting overall economic growth.