- May 24, 2026
Gold Import Duty Hike May Hit Jewellery Retail Demand Hard In FY27: Crisil
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CRISIL says Indias organised gold jewellery retailers face a 13-15 percent volume drop amid high prices and duty hikes, but revenues may rise 20-25 percent.
Gold Retailers Likely To See Lowest Sales Volumes In A Decade, Says Crisil
ndia’s organised gold jewellery retail sector is expected to witness a further 13-15 per cent year-on-year decline in sales volumes this fiscal after an 8 per cent drop last year, as elevated gold prices and the recent customs duty hike continue to weigh on demand, according to a report by CRISIL.
The report said organised jewellers are likely to see volumes fall to 620-640 tonnes this fiscal, marking the lowest level in a decade excluding the Covid-affected FY21. Despite the sharp drop in demand, the sector is expected to post a strong revenue growth of 20-25 per cent on account of higher gold realisations.
High Prices And Duty Hike Hit Affordability
Domestic gold prices surged 55 per cent in the previous fiscal due to rising global prices amid geopolitical tensions and a weakening rupee against the US dollar. The recent increase in customs duty on gold to 15 per cent from 6 per cent is also expected to further dampen jewellery demand.
India imported around 720 tonnes of gold in FY26, resulting in a foreign exchange outflow of nearly USD 72 billion. The government’s decision to raise import duty was aimed at curbing demand, reducing imports and supporting the rupee.
According to Himank Sharma, Director at CRISIL Ratings, the higher customs duty will act as a significant deterrent for gold jewellery demand. He noted that while investment demand through gold bars and coins has risen sharply, it is unlikely to fully offset the decline in jewellery purchases.
Shift Towards Lightweight Jewellery
The report highlighted that consumers are increasingly shifting towards lightweight and lower-carat jewellery in the 16-22 carat range to manage affordability pressures. Demand for studded jewellery has also risen.
Over the past two fiscals, jewellery sales volumes have declined by nearly 25 per cent, while demand for gold bars and coins has increased by more than 50 per cent due to investment-driven buying.
Retailers Expand Cautiously
CRISIL Ratings Associate Director Gaurav Arora said organised retailers are continuing expansion through franchise-led models to improve capital efficiency and strengthen their presence in tier II and III cities.
Although overall debt levels are expected to rise by nearly one-third this fiscal due to higher inventory requirements, the report said credit profiles of organised retailers are likely to remain stable, supported by stronger revenues and healthy cash accruals.
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