Jewellery stocks tumble after gold, silver import duty hike to 15%; Titan, Kalyan Jewellers fall up to 5%

Shares of jewellery companies declined sharply on Wednesday after the government raised import duties on gold and silver to 15 per cent from 6 per cent, aiming to curb overseas purchases of precious metals and reduce pressure on India’s foreign exchange reserves.

The revised import duty structure came into effect from May 13. The government has imposed a 10 per cent basic customs duty along with a 5 per cent Agriculture Infrastructure and Development Cess (AIDC) on gold and silver imports.

Jewellery stocks under pressure

The move triggered selling across jewellery counters amid concerns over higher raw material costs and possible demand slowdown in the domestic market.

Among major stocks, Titan Company shares were trading at Rs 3,997.20, down 1.43 per cent on the NSE. Kalyan Jewellers India shares slipped as much as 5.40 per cent to Rs 342.25.

Senco Gold declined 0.56 per cent to Rs 310.70, while Thangamayil Jewellery fell over 5 per cent to Rs 3,485.10 during the session.

Why the government increased import duty

India imports nearly all of its gold requirements. Higher imports of gold and silver increase pressure on the current account deficit and foreign exchange reserves.

The latest duty hike is aimed at discouraging non-essential imports and supporting the rupee, which has remained among Asia’s weaker-performing currencies in recent months.

Prime Minister Narendra Modi had earlier urged citizens to avoid buying gold for one year as part of efforts to conserve foreign exchange reserves.

Market participants believe the higher import taxes could raise domestic prices of gold and silver further, potentially affecting jewellery demand in the near term, especially in price-sensitive segments.

Anil Singhvi decodes market impact

Market expert Anil Singhvi said jewellery stocks could remain under pressure even in the coming sessions following the sharp increase in import duties.

According to Singhvi, companies with exposure to silver raw material may also face pressure due to rising input costs. He added that solar panel makers and EMS companies could see a mild negative impact because silver is widely used in manufacturing processes.

However, Singhvi expects a positive impact on Hindustan Zinc shares, while gold loan companies may benefit marginally from higher gold valuations.

Gold, silver import duty sharply higher

The import duty on gold has increased significantly on a per kilogram basis.

For gold imports, duty has risen from Rs 8,31,230 per kg earlier to Rs 20,78,075 per kg after the latest revision, an increase of Rs 12,46,845 per kg.

For silver, import duty has risen from Rs 14,861 per kg to Rs 37,153 per kg, marking an increase of Rs 22,292 per kg.

What this means for the market

The government’s move is expected to help reduce precious metal imports and narrow the trade deficit. It may also provide some support to the rupee by lowering outflows of foreign exchange.