The recent hike in import duties and tighter curbs on gold and silver imports have created pressure on jewellery stocks in the near term. The government increased import duties on the two precious metals — gold and silver — from 6% to 15% and also tightened import regulations to ease pressure on the country’s forex reserves and narrow the trade deficit.
The government also shifted gold and silver imports from the “free” category to the “restricted” category in May 2026, limited gold imports under the advance authorisation scheme to 100 kg per licence, and required exporters to fulfil 50% of their export obligation before obtaining fresh approvals.
According to Seema Srivastava, Senior Research Analyst at SMC Global Securities, this raises landed costs and could tighten physical supply; it structurally benefits large, organised jewellers over unorganised players and grey market operators. Companies with strong domestic sourcing, recycling networks, a high-studded mix, and export exposure are best placed, she added.
Impact on jewellery demand
Investors must understand that jewellery demand in India tends to behave differently from many other industries.
“Purchases are often driven by weddings, festivals and cultural preferences, which means demand generally remains resilient even when prices move higher,” Ravi Singh, Chief Research Officer from Master Capital Services, explained.
Meanwhile, Srivasatava further said that in the long term, import curbs are meant to cut the $71.98 billion gold and $12 billion silver import bill, but past experiences have shown that duty hikes don’t dent demand; volumes were stable even when duties rose to 10% in 2013.
“Investment demand now forms 40%+ of gold consumption, and higher prices could lift ETF premiums as physical supply tightens,” she added.
A World Gold Council report revealed that India’s gold jewellery demand weakened in the first quarter as soaring gold prices hurt affordability. However, total spending touched a record high, reflecting strong underlying consumer appetite.
Jewellery demand volumes fell 19% year-on-year (YoY) to 66 tonnes — marking the second-lowest first-quarter level since 2000 — mainly due to an 81% annual jump in domestic gold prices. Meanwhile, value demand climbed 47% YoY to an all-time high of ₹999 billion (around $11 billion), indicating increased consumer spending despite lower purchase volumes.
Impact of import restrictions on gold and silver prices
The import restrictions and duties resulted in a 6 – 8% jump in gold and silver prices, indicating immediate pass-through of higher import costs.
“Rise in Custom Duty increases the price of precious metal, and import restriction raises the concern on supply, leading to discount compression or higher premium. India is a significant market for both gold and silver, and lower demand may cause downward pressure on prices in the international market, leading to lower prices irrespective of other factors,” said Mirrae Asset Mutual Fund in a report.
On Tuesday, MCX gold June futures edged up 0.17% to ₹1,59,674 per 10 grams, while MCX silver July futures slipped 0.30% to ₹2,75,824 per kg.
Which jewellery stocks to buy?
Singh of Master Capital Services believes that quality businesses still appear more attractive than chasing short-term momentum, from an investment point of view.
“Investors may be better off looking at companies with strong execution and steady growth potential rather than reacting only to near-term policy changes,” Singh said.
Srivastava of SMC Global said, while picking Titan, Kalyan Jewellers, Thangamayil Jewellery and Senco Gold as top jewellery stocks to buy, near-term margins may face pressure from higher gold costs and working capital, but long-term prospects improve as compliance costs eliminate smaller rivals and listed players gain market share.
“If you have a 3-5 year view, accumulating quality names like Titan on dips makes sense, while midcaps like Kalyan and Senco offer higher risk-reward if execution holds,” she said.
While remaining bullish on Titan stock, she added that the company remains the quality franchise with ∼35% studded share, Tata backing, and Tanishq’s brand allowing pricing power to pass on duty impact; it fell only 1.5% post the May 13 hike versus 5.87% for Kalyan, showing relative resilience.
“Kalyan Jewellers and Thangamayil Jewellery have deep south India networks and improving balance sheets, and any shift of demand from unorganised to organised players due to supply curbs helps them gain share, though Kalyan saw the sharpest near-term fall. Senco Gold and Sky Gold, with export-oriented models and diamond studded focus, benefit because exporters under SEZ/EOU/Advance Authorisation are exempt from restrictions, protecting their raw material access,” she added.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
