The gold and jewellery industry expects a cut in import duties on the yellow metal when finance minister Nirmala Sitharaman presents Budget 2025 on February 1.
The move will help bring Indian gold prices closer to the global benchmarks, curb smuggling and boost demand, they say .
In the previous year, the government lowered the import duty on gold from 15 percent to 6 percent. Industry insiders expect the duty to be cut by another 3 percent in the Budget for 2025-26.
“A further duty reduction would bring Indian gold prices closer to global levels. It would also discourage illegal imports and support demand, particularly during the wedding season. However, global factors such as currency fluctuations may influence the overall impact,” Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions Limited (RSBL), said.
Regulate digital gold
The industry is also pushing for a dedicated regulator for digital gold, an asset class that is gaining traction.
Digital gold allows small-scale investments and easy conversion into physical gold. Regulation will help strengthen investor confidence and promote wider adoption, say experts.
Revisit the gold monetisation scheme
In 2015, the government introduced a gold monetisation scheme (GMS) to encourage people to monetise their physical holdings.
Industry leaders want the scheme to be made more attractive. Improving the GMS could help unlock India’s vast household gold reserves and reduce the country’s current account deficit, they say.
Tax relief to boost demand
Jewellery manufacturers have called for tax relief to increase disposable income, which, in turn, will drive demand.
They have also proposed reducing the goods and services rax (GST) on gold from 3 percent to a percent, aligning prices with international markets.
The higher cost of the precious metal in India compared to countries like the UAE, where lower duties and refundable VAT make the metal cheaper, encourages smuggling.
“The Middle East benefits from lower taxes and greater access to international markets. A reduction in India’s import duties and GST would help narrow this price gap,” Kothari said.
Calls for reforms
To strengthen jewellery manufacturing, the industry is also pushing for amendments to the Special Economic Zones (SEZ) Act. Key proposals include allowing SEZs to optimise their capacities and introduce “reverse job-work” to enhance operational efficiency.
Colin Shah, Managing Director of Kama Jewellery, said, “The jewellery industry plays a crucial role in India’s economy, but declining exports remain a challenge. Reforms to the SEZ Act and simplified tax structures would encourage manufacturing and boost export potential.”
Organised retail poised for growth
In FY24, India’s jewellery retail market was valued at approximately $80 billion, accounting for 36-38 percent of the industry.
Analysts expect the market to touch $145 billion by FY28, growing at a compound annual growth rate (CAGR) of 15-16 percent. The organised sector is expected to grow faster, at over 20 percent CAGR and increase its market share to 42-43 percent.
Rising disposable income and higher demand for everyday jewellery are among the factors favouring retailers.
All India Gem and Jewellery Domestic Council chairman Rajesh Rokde called for rationalisation of taxes and easy access to finance to help the industry.
Malabar Gold & Diamonds chairman MP Ahammed said the industry expects policy continuity in the Budget, which will boost demand and generate jobs.
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