Jewellery Stocks Slide as Gold Import Duty Hiked to 15%

Jewellery stocks in India witnessed a sharp decline after the government increased import duties on gold and silver. The move, aimed at curbing imports and stabilising the rupee, has raised concerns about rising domestic prices and weakening consumer demand, especially during key buying seasons.

Jewellery Stocks Come Under Pressure

Shares of leading jewellery companies fell significantly following the announcement of higher import duties. The market reacted swiftly as investors anticipated a negative impact on demand and profitability.

Kalyan Jewellers saw its stock drop nearly 5.8% during intraday trading on the NSE, while Senco Gold declined by around 3.4%. Other players such as Sky Gold and Diamond, P N Gadgil, and Thangamayil Jewellery also recorded losses ranging between 3.6% and 4.5%.

Meanwhile, Titan Company, one of the largest organised jewellery retailers in India, slipped about 1.5%. In comparison, the broader market benchmark, NSE Nifty50, registered only a मामूली decline of 0.14% during early trading hours, indicating that the sell-off was largely sector-specific.

Government Raises Import Duty to 15%

The Centre has increased the total import duty on gold and silver to 15%, up from the earlier 6%. This includes:

• 10% Basic Customs Duty
• 5% Agriculture Infrastructure and Development Cess (AIDC)

The decision is part of a broader strategy to reduce gold imports, which significantly impact India’s current account deficit and foreign exchange reserves. Additionally, the move is expected to provide support to the weakening Indian rupee.

Impact on Domestic Gold Prices

Analysts believe the duty hike will push domestic gold prices even higher. This comes at a time when global gold prices are already elevated, and the Indian rupee has been under pressure.

Even though international gold prices have shown some correction recently, domestic prices in India remain close to record highs due to currency depreciation. The increased duty will further widen the gap between global and local prices, making gold more expensive for Indian consumers.

Demand Concerns in Wedding and Festive Seasons

Higher gold prices are expected to weigh heavily on consumer demand, particularly in price-sensitive segments. Weddings and festivals, which traditionally drive jewellery purchases in India, may see subdued demand as buyers delay discretionary spending.

Organised jewellery retailers such as Titan Company, Kalyan Jewellers, Senco Gold, and PC Jeweller could face challenges in maintaining sales volumes. Analysts warn that prolonged high prices may lead to a slowdown in footfall and revenue growth across the sector.

Multiple Challenges for the Jewellery Industry

Market experts point out that the duty hike is not the only concern. The sector is already dealing with:

• A sharp rally in global gold prices
• Depreciation of the Indian rupee
• Weakening consumer sentiment

According to G Chokkalingam, Founder and CEO of Equinomics Research, the duty hike acts as a “third major shock” for both buyers and sellers in the jewellery market.

He noted that while global prices have moderated slightly, domestic prices remain elevated, creating sustained pressure on demand. This combination of factors is likely to negatively impact jewellery companies in the near term.

Decline in Gold Consumption Trends

Recent data highlights the pressure on demand. India’s gold jewellery consumption fell by 19% year-on-year in the first quarter of calendar year 2026, dropping to 66.1 tonnes, according to the World Gold Council.

This decline reflects cautious consumer behaviour amid high prices and economic uncertainty. The latest duty hike could further intensify this trend, leading to lower sales volumes for jewellers.

Margin Pressure and Business Outlook

Analysts believe that rising input costs combined with weaker demand could squeeze margins for jewellery companies. Higher prices may not always be fully passed on to customers, forcing companies to absorb part of the cost increase.

Krnthi Bathini, Equity Strategist at WealthMills Securities, stated that the government’s move is likely to impact both revenues and profitability in the short to medium term.

Investors have been advised to remain cautious. Some experts suggest waiting for a further correction of around 10% in jewellery stocks before considering fresh investments.

Gold Financing Companies See Gains

In contrast to jewellery stocks, gold financing companies witnessed a rally. Firms such as Muthoot Finance, Manappuram Finance, and IIFL Finance benefited from the rise in gold prices.

Muthoot Finance shares gained around 4%, while Manappuram Finance and IIFL Finance rose approximately 3.9% and 7.1%, respectively.

Higher gold prices increase the value of collateral pledged for loans, improving loan-to-value ratios and supporting business growth for these companies.

Risks for Gold Loan Segment

Despite the positive momentum, analysts caution that the benefits for gold financing firms may be limited. If gold prices remain persistently high, consumers may reduce jewellery purchases, which could eventually reduce the availability of gold for pledging.

Additionally, price volatility in gold could pose risks in managing collateral and maintaining stable lending operations.

Experts suggest that investors should closely monitor jewellery demand trends, as they directly influence the long-term growth of gold loan companies.

Government’s Broader Economic Strategy

The duty hike is part of the government’s broader efforts to control non-essential imports and manage India’s trade deficit. Gold imports account for a significant portion of the country’s import bill, putting pressure on foreign exchange reserves.

Prime Minister Narendra Modi has previously encouraged citizens to reduce gold purchases to help conserve forex reserves. The latest policy move aligns with that objective, aiming to balance economic stability with consumer demand.

Conclusion

The increase in gold import duty to 15% has created a ripple effect across the jewellery and financial sectors. While jewellery stocks face immediate pressure due to demand concerns and rising costs, gold financing companies have gained in the short term.

However, the overall outlook remains cautious. Sustained high prices, currency fluctuations, and evolving consumer behaviour will play a crucial role in determining the future trajectory of the gold market in India.