Jewellery Stocks Fall Up to 6% Following Gold and Silver Import Duty Hike

Jewellery Stocks Plummet as Government Raises Customs Duties on Gold and Silver

On Wednesday, 13 May, the jewellery sector came under intense selling pressure after the government increased customs duties on gold and silver to 15% from 6% in a bid to dampen demand and curb sector margins. This move has led to a sharp decline in shares of key players such as Kalyan Jewellers India, PC Jeweller, P N Gadgil Jewellers, Senco Gold, Thangamayil Jewellery, and Titan Company, with some stocks plummeting up to 6%.

Experts believe that the government's decision to raise duties on gold and silver imports, coupled with Prime Minister Narendra Modi's appeal to citizens to refrain from buying gold for a year, has put the jewellery sector under pressure. Analysts at Angel One and Motilal Oswal Financial Services caution investors to adopt a wait-and-watch approach in the near term, as sentiment remains negative. However, they note that stocks like Titan Company and Senco Gold could outperform if there is any positive development or respite.

The government's decision to raise customs duties on gold and silver imports follows earlier market expectations. As per a Business Today report, shares in the jewellery sector have faced challenges this week amid growing concerns about possible government actions on gold imports. The government has implemented a 10% basic customs duty and a 5% Agricultural Infrastructure and Development Cess (AIDC) on gold and silver, raising the total import tax from 6% to 15%.

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According to analysts, the government's message is aimed at encouraging temporary restraint in imports and preserving macro stability, rather than signalling any structural shift against gold ownership. Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, notes that Prime Minister Narendra Modi's remarks on delaying gold purchases should be viewed in the context of macroeconomic stability and import management. He adds that the timing of the appeal is significant, given the current backdrop of rising oil prices, US–Iran geopolitical tensions, and pressure on the currency due to higher import bills.

Trivedi also points out that the move is unlikely to alter India's long-term demand for gold, which remains deeply embedded in savings and cultural practices. However, the decision may temper discretionary jewellery demand and lead to cautious sentiment across bullion and jewellery-linked businesses.