India has reduced its gold import tax to support the country’s jewelry manufacturing sector, which is the second-largest consumer of gold globally. In her annual budget speech in New Delhi, Finance Minister Nirmala Sitharaman announced the reduction of the duty on gold from 15% to 6%. She stated that this measure aims to “enhance domestic value addition in gold and precious metal jewelry.”
This reduction is expected to provide relief to consumers who have been facing high local gold prices due to a global price increase. India imports almost all its gold, and high duties have led to widespread smuggling to avoid these costs.
According to Hareesh V, head of commodities at Geojit Financial Services, the decrease in customs duty could result in lower domestic prices and potentially boost demand for gold.
The announcement had a positive impact on the stock prices of leading jewelry companies. Shares of Titan Co. rose by as much as 7.2%, marking the largest intraday gain since July 2022. Kalyan Jewellers India Ltd. saw a rise of up to 6.1%, while Senco Gold Ltd. and PC Jeweller Ltd. increased by 12% and 5%, respectively.
Additionally, the government also reduced the import duty on silver from 15% to 6%, and on platinum and palladium from 15.4% to 6.4%, as per the budget documents.
