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Gold duty hike to escalate export cost, block working capital: Exporters

Hiking duties merely inflates prices, such measures fuel smuggling and escalate export costs, says GJEPC.

3 min readNew DelhiMay 13, 2026 10:40 PM IST

Amritsar: A customer checks a pair of earrings at a jewellery shop, in Amrisar, Punjab, Wednesday, May 13, 2026. Jewellers and industry leaders on Wednesday said the hike in import duty on gold and silver could impact jewellery volumes in the short term, though demand is expected to remain resilient due to the yellow metal's enduring cultural and investment appeal in India. (PTI Photo/Shiva Sharma) (PTI05_13_2026_000190A)

A customer checks a pair of earrings at a jewellery shop, in Amrisar, Punjab, Wednesday, May 13, 2026. (PTI Photo

A day after the government doubled the duty on gold imports to 15%, Indian gems and jewellery traders have said the move will stifle export shipments amid trade disruption in the West Asia region.

Gems and Jewellery Export Promotion Council (GJEPC) said that hiking the import duty on gold could be ineffective in reducing imports and would escalate export cost and fuel smuggling.

“Hiking import duties rarely curbs gold imports — it merely inflates prices. Despite gold prices doubling recently, imports have not declined proportionally. Such measures often fuel smuggling and escalate export costs,” GJEPC said.

Also Read | Why India hiked import duty on gold, silver amid rupee fall and rising oil prices

Exporters now face bank guarantees of Rs 28-30 lakhs per kg of duty-free gold from nominated agencies, severely blocking working capital and stifling exports, the export promotion council said.

Thane: salespersons wait for customers at a deserted jewellery shop, in Thane, Maharashtra, Wednesday, May 13, 2026. Jewellers and industry leaders on Wednesday said the hike in import duty on gold and silver could impact jewellery volumes in the short term, though demand is expected to remain resilient due to the yellow metal's enduring cultural and investment appeal in India. (PTI Photo) (PTI05_13_2026_000390B)

Salespersons wait for customers at a deserted jewellery shop, in Thane, Maharashtra, Wednesday, May 13, 2026. (PTI Photo)

“The most severe impact of this policy will be felt by MSME manufacturers, who are the “backbone” of our industry, accounting for 80% of GJEPC’s membership, who are currently facing a critical liquidity crunch. This retrograde step risks undermining our industry’s competitiveness at a critical time,” exporters said.

Also Read | How India’s UAE gold trade deal may have made its import bill concerns worse

This comes as gems and jewellery sector is currently navigating a phase of heightened uncertainty. West Asia accounts for 18% of the country’s total diamond exports during the first nine months of the current fiscal year and nearly 68% of India’s rough diamond imports originate from the UAE and Israel, according to the NITI Aayog.

Trade data for March showed that imports from the UAE, Saudi Arabia, Iraq, and Qatar in March slipped 66.32%, 37.32%, 64.30% and 47.89%, respectively.

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Exports to the UAE also declined by 61.93% and to Saudi Arabia by 45.67%, data released by Commerce and Industry Ministry showed.

Most labour-intensive sectors registered a steep decline in exports during March. While gems and jewellery exports slipped by nearly 30%, readymade garments declined 19%. Drugs and pharma exports also slipped by 19% in March.

Ravi Dutta Mishra

Ravi Dutta Mishra is a Principal Correspondent with The Indian Express, specializing in economic policy and financial regulations. With over five years of experience in business journalism, he provides critical coverage of the frameworks that govern India's commercial landscape. Expertise & Focus Areas: Mishra’s reporting concentrates on the intersection of government policy and market operations. His core beats include: Trade & Commerce: Analysis of India's import-export trends, trade agreements, and commercial policies. Banking & Finance: Covering regulatory changes and policy decisions affecting the banking sector. Professional Experience: Prior to joining The Indian Express, Mishra built a robust portfolio working with some of India's leading financial news organizations. His background includes tenures at: Mint CNBC-TV18 This diverse experience across both print and broadcast media has equipped him with a holistic understanding of financial storytelling and news cycles. Find all stories by Ravi Dutta Mishra here ... Read More

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