Jewellery stocks witnessed sharp selling pressure on Monday after fears of a possible increase in gold import duty rattled investors. Shares of major players including Titan Company, Kalyan Jewellers, Senco Gold, and Sky Gold and Diamonds fell as much as 11 percent during intraday trading.
The market reaction came shortly after Prime Minister Narendra Modi urged citizens to avoid purchasing gold for the next year as part of broader economic conservation measures aimed at reducing pressure on India’s foreign exchange reserves amid rising global uncertainty.
Why Jewellery Stocks Fell
Investors fear the government may soon raise gold import duties to discourage excessive imports and reduce dollar outflow from the country. Since India imports more than 90 percent of its gold requirement, any increase in import taxes could make gold jewellery significantly more expensive and hurt consumer demand.
India currently imposes a total 6 percent import duty on gold, including:
- 5 percent Basic Customs Duty (BCD)
- 1 percent Agriculture Infrastructure and Development Cess (AIDC)
Market experts believe a higher import duty could directly impact jewellery manufacturers, retailers, and bullion-linked businesses by increasing raw material costs and reducing sales volumes.
Gold Imports Putting Pressure On Forex Reserves
India remains one of the world’s largest gold consumers, importing nearly 700–800 tonnes annually while domestic production remains negligible. According to reports, India’s gold import bill surged to nearly $72 billion in FY 2025-26, marking a sharp increase from the previous year.
At the same time, elevated crude oil prices, a stronger US dollar, and geopolitical tensions in West Asia have increased pressure on India’s foreign exchange reserves and weakened the rupee.
The Reserve Bank of India’s forex reserves reportedly declined from record highs earlier this year as import costs rose sharply.
Industry Concerns Grow
According to reports, Suvankar Sen warned that a hike in import duty could reduce gold import volumes by 10–12 percent. Analysts also expect wedding jewellery demand and discretionary luxury spending to slow if prices continue rising.
The sector is now closely watching whether the government introduces policy measures in the coming weeks to control imports and stabilise external finances.
Broader Economic Context
The concerns over gold imports are part of a larger economic conversation triggered by the ongoing West Asia crisis and volatility in global energy markets. Along with avoiding gold purchases, PM Modi recently encouraged citizens to:
- Reduce unnecessary fuel consumption
- Prefer work-from-home arrangements
- Avoid non-essential foreign travel
- Support domestic tourism and local products
These appeals are being viewed as precautionary measures aimed at protecting India’s economy from external shocks and preserving foreign exchange reserves during uncertain global conditions.