The India Bullions & Jewellery Association (IBJA) on the hike in import duty on gold and silver, and the Prime Minister Narendra Modi’s appeal to curb the buying of yellow metal for a year, said this could lead to salary payments concerns and put 8.5 million workers at stake.
In an exclusive interaction with Times Now Digital, IBJA’s national secretary Surendra Mehta said, “if the government wants the industry to slow down temporarily, it should also introduce relief measures for jewellers, artisans and MSMEs operating in the sector.”
“If business activity slows, then questions arise over how artisans will be paid, how salaries will be managed and how businesses will service bank loans. We hope the government considers measures like interest subvention and financial support,” he said.
On concerns over employment, Mehta warned that the gems and jewellery ecosystem, particularly artisans and small players, could face stress if demand weakens sharply.
“India has nearly 8.5 million workers dependent on the gems and jewellery industry, many of whom are engaged in handmade jewellery manufacturing. The biggest challenge today is ensuring artisans continue to get sufficient work. India is globally known for handmade jewellery and the industry must survive,” he noted.
Gold Demand May Fall 10-12%
Mehta further said India’s gold demand could decline by 10-12 per cent in calendar year 2026 following the government’s move.
“The government raised the import duty on gold and silver from 6 per cent to 15 per cent. As an association, we expect that this could reduce India’s total gold imports by about 10 per cent this calendar year. Demand may also decline by around 10-12 per cent,” he said.
Mehta said the industry understands the government’s concerns, especially at a time when global gold prices have nearly doubled over the past year, sharply increasing India’s foreign exchange outgo.
“Gold is one of the largest foreign exchange expenditures for the government. Even if import quantities remain the same, the outflow rises significantly because prices have surged,” he said.
He added that geopolitical tensions, including the ongoing conflict involving Iran and global oil market uncertainties, have forced the government to prioritise imports of crude oil, edible oils and fertilisers over gold imports.
Bring household gold into formal ecosystem
Another key suggestion by the IBJA national secretary is to bring household gold into the formal ecosystem.
Indian households hold nearly 34,000 tonnes of gold that could be monetised through instruments such as electronic gold receipts. “This can help both the government and the jewellery industry. Consumers can exchange old gold instead of purchasing fresh gold, while the government benefits through lower current account deficit pressure,” he said, while calling for amendments in GST and income tax rules to facilitate the move.
On changing consumer trends, Mehta said investors are increasingly shifting from traditional jewellery purchases to investment-oriented products such as gold ETFs and SIPs.
“Nearly 18 per cent of jewellery business has already shifted toward investment buying. Consumers looking purely for returns are moving toward ETFs and gold SIPs,” he said.
On the question of concerns that high import duties are fuelling gold smuggling again, he said, “Illegal imports always rise when duties become higher. The government will have to ensure strict border monitoring so that smuggling activities do not increase.”
