With the Union Budget 2025 set for February 1, the gold and jewellery industry is watching closely for key policy changes. Experts expect announcements on import duties, tax reforms, and support for manufacturing.
Import duties on gold
The gold industry anticipates a reduction in import duties.
In the previous budget, the import duty on gold was cut from 15% to 6%.
This move helped stabilise gold prices in India. Experts now expect the duty to drop further to 3% in Budget 2025.
Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions Limited (RSBL), says, “A further duty reduction would bring Indian gold prices closer to global benchmarks. It would reduce illegal imports and boost demand, especially during the wedding season. Though global factors like currency fluctuations may limit the impact, it will support long-term price stability.”
Price disparity between India and the Middle East
Gold in countries like the UAE is much cheaper due to minimal import duties and a refundable VAT for tourists. In India, high import duties and a 3% GST make gold more expensive.
This price difference has led to increased gold smuggling.
Kothari adds, “The Middle East benefits from lower taxes and better access to international markets, which reduces gold costs. A reduction in India’s duties and GST would help narrow this price gap.”
Support for gems and jewellery manufacturing
The jewellery sector is seeking reforms to support domestic manufacturing. One key expectation is an amendment to the Special Economic Zones (SEZ) Act.
The sector wants SEZs to utilize their capacities better and introduce ‘reverse job-work’ to improve efficiency.
Colin Shah, Managing Director of Kama jewellery, notes, “The jewellery industry plays a key role in India’s economy, but it faces challenges, particularly with declining exports. Reforms to the SEZ Act and simplified tax processes could encourage manufacturing and boost exports.”