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【Mumbai, Indi】Gold Duty Hike to Hurt Jewellery Trade, Spur Grey Market, Heighten Smuggling Risks: Exporters

May 13, 2026

Editor’s Note

**Editor’s Note:** India’s hike in gold import duty to 15% is set to raise prices and risks fueling illegal trade. Industry voices warn of harm to small businesses and a growing parallel economy, even as the government seeks to rein in the import bill.

Industry Impact and Concerns

India’s gold import duty has risen to 15 percent. This move is expected to make gold more expensive and could boost illegal trade. Industry leaders fear this will harm small businesses and create a parallel economy. The government aims to curb imports amid a rising import bill.

“Business is now going to become difficult on the back of the Prime Minister’s austerity measures and following the import duty hike in bullion. What the industry fears is that this will give rise to the grey market… smuggling is likely to grow, setting up a parallel economy in the country,” the All India Gems and Jewellery Council (GJC) chairman Rajesh Rokde told PTI.

Having said that, Rokde further added that the entire gems and jewellery industry stands firmly with the nation and respects the government’s policy decisions taken in the larger national interest. We believe the increase in customs duty is a temporary and calibrated measure in the present economic scenario.

“The trade should remain calm and confident, as India’s jewellery sector has always demonstrated resilience and adaptability during challenging times. The Council will continue to work closely with the government and all stakeholders to ensure stability, consumer confidence, and sustained growth of the industry,” he added.

GJC Vice Chairman Avinash Gupta, echoing a similar view said, gold and jewellery are deeply connected with India’s economy, traditions, and savings culture.

Government and Industry Response

Meanwhile, the Gem and Jewellery Export Promotion Council (GJEPC) acknowledging the government’s decision to raise gold import duty, said that as an industry, GJEPC remains committed to the spirit of ‘Nation First’ echoed by Prime Minister Narendra Modi.

“We have written to the Prime Minister outlining proactive measures from our members to curb gold imports and bolster self-reliance, including promotion of lower caratage jewellery and encouraging consumers to exchange old items for new ones, among others. We are submitting a detailed paper on revitalising GMS for the government’s consideration,” GJEPC chairman Kirit Bhansali said.

Economic and Trade Implications

Mumbai, The jewellery trade is likely to face challenging times ahead following the hike in gold import duty to 15 per cent, a move that could spur the grey market, and may heighten smuggling risks, exporters said.

According to exporters, a hike in import duty generally inflates prices. In recent times, despite gold prices doubling, imports have not declined proportionally. Such measures often fuel smuggling and escalate export costs, they said.

The most severe impact of this policy will be felt by Micro, Small and Medium Enterprises (MSME) manufacturers, who are the ‘backbone’ of the industry, and are currently facing a critical liquidity crunch, according to exporters.

Explaining the duty hike, Rokde said the import duty, which includes Customs Duty, GST and Agricultural Cess, will make gold costlier by around Rs 27,000 per 10 grams.

He said the GJC has called an all-associations meeting of the industry in Mumbai on Wednesday to mull over the recent policy decisions and decide on further action.

The government on Wednesday hiked import duties on gold and silver to 15 per cent from 6 per cent as part of measures to curb inbound shipments of precious metals amid a rising import bill due to the West Asia crisis.

Prime Minister Narendra Modi on Sunday made a clarion call for curbs on gold purchases, along with other austerity measures to save on foreign exchange. The government has hiked the social welfare surcharge (SWS) and the agriculture infrastructure and development cess (AIDC), effective May 13.

The duty hikes will raise the overall customs duty on gold to 15 per cent.

India’s gold imports surged more than 24 per cent to an all-time high of USD 71.98 billion in 2025-26. In volume terms, however, the shipments dipped 4.76 per cent to 721.03 tonnes in 2025-26.

“At this juncture, it is important for the trade fraternity to avoid panic and continue business with confidence and responsibility. We fully support the nation’s larger economic priorities and remain committed to constructive engagement with policymakers to safeguard the interests of artisans, traders, and consumers while ensuring long-term growth and stability of the sector,” he added.

In response to his call, GJEPC convened a meeting on Tuesday with major retailers and manufacturers, the apex export body said in a statement.

That said, GJEPC said its consistent position is that hiking import duties rarely curbs gold imports — it merely inflates prices.

“Exporters now face bank guarantees of Rs 28-30 lakhs per kg of duty-free gold from nominated agencies, severely blocking working capital and stifling exports,” he said, adding that this retrograde step risks undermining our industry’s competitiveness at a critical time.

The GJEPC has urged the government to engage in dialogue for sustainable solutions that align fiscal goals with export growth, Bhansali added.

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⏰ Published on: May 13, 2026