Duty cut on jewellery to boost demand
The proposed customs duty cut on jewellery and platinum parts, announced in the FY26 Budget, is likely to give a fillip to consumption, say jewellery firms. The move is expected to make platinum jewellery cheaper, since the duty cut is sharp from 25% to 5% on platinum parts (called findings), executives said. Customs duty on jewellery, on the other hand, has been slashed from 25% to 20%. The Budget has also introduced a new tariff line to differentiate gold imports in bars from those in other forms.
“These steps (of reducing duties) will boost demand at a time when the government through the Budget has sought to improve middle-class consumption,” Suvankar Sen, MD & CEO, Senco Gold & Diamonds, said. Executives at the recently-listed PN Gadgil Jewellers say for a market like India where jewellery consumption is high, duty cuts bring prices down. “This aligns with the overall trend of improving consumption,” an official said.
Precious metal prices, including gold, silver and platinum, have risen by at least 20% year-on-year in 2024, and may remain high in 2025 tracing geopolitical issues, global events and supply disruptions, experts said.
The December 2024 quarter was a good period for organised jewellers, led by a combination of festive and wedding season demand. The government had also slashed import duty on gold from 15% to 6% in July, ahead of the festive season to boost demand.
Further duty cuts could keep the sales momentum going for organised players, who have benefited from the formalisation trend in the domestic jewellery market.Gem and Jewellery Export Promotion Council (GJEPC) chairman Vipul Shah said the body welcomed the proposal of distinguishing between gold imports in bars versus other forms.
In line with this, silver with 99.9% purity, gold with 99.5% purity and platinum with 99% purity each would be classified under headings 7106, 7108 and 7110 in Chapter 71 of customs tariffs.“This move aligns with the representation made by GJEPC for addressing the issue of classification of alloys of platinum (predominantly containing gold), which was leading to claims of unwarranted customs duty exemptions for the import of platinum under the India-UAE CEPA (Comprehensive Economic Partnership Agreement),” he said.Dubai is a major source for all smuggled gold and other precious metals coming into India, either directly or via Bangladesh, Nepal, Myanmar or Sri Lanka.
Source: https://www.financialexpress.com