The effective import duty on gold and silver was raised to about 15% from about 6% at midnight on 13 May 2026 and many investors are now looking at how the 15% gold import duty affects the prices of gold An exchange traded fund is a mutual fund scheme with units listed on a stock exchange, built to follow an index or an asset such as gold. Read the full meaning of ETF and jewellery. The share prices of listed jewellers reacted on the same day.
Kalyan Jewellers dropped 5.87% to Rs 340.55, which becomes a 52‑week low for the share. Thangamayil Jewellery fell about 3% to Rs 3,562.20, while Senco Gold slid 0.56% to Rs 310.70.
Investors holding shares in the jewelry sector were confronted with this news while the holiday buying season was still a long way off. Thus, a lot of them found themselves continuously watching the price fluctuations throughout the day.
Along with this, the duty on gold and silver jewellery parts, known as findings, is fixed at 5%. The rate comes into force from midnight, giving no room for jewelers to change their stock or price lists before market opens.
ICICI Direct thinks that the duty rise will push the price of domestic gold higher. It also thinks this move will not be good for jewellery makers for the short term, because higher gold prices may mean that people buy less gold during the same time.
When a family buys gold for a wedding or any other occasion, now the worry is how the duty gets added to the price of every product. Jewellery, gold ETFs and digital gold all refer to the same imported metal but the duty is embedded in the cost of each in different ways. The charges and regulations also differ from one to another.
The following sections tell what is different in the new rule, how that change has now made its way into the price of every product and what analysts think will happen in the upcoming months.
What changed in the duty and why it came
The new rate turns the decision taken in the Budget 2024 around. Back then government reduced the duty on gold from 15% to 6%, hoping to encourage legal imports and to back the jewellers, who were suffering competition from informal channels.
Before the rate rise, the 6% figure comprised 5% as basic customs duty and 1% as agriculture infrastructure cess.
The new 15% structure is made up of a 10% basic customs duty and a 5% agriculture infrastructure cess. The basic duty was raised from 5% to 10% and the cess from 1% to 5%, which gives a total of 15%.
For a regular buyer, the manner in which the basic duty and the cess are divided does not alter the final cost at the jeweller’s counter. This split between basic duty and cess matters mostly for traders and importers, the parties that handle the customs paperwork directly.
The background of the decision is the magnitude of the gold import bill. India imported gold worth $72 billion in FY26 which was more than 9% of total imports for the country. A bill of this size puts pressure on the trade deficit and on the forex reserves, and the hike has been seen in that context.
Families who had adjusted to the lower rates for the past couple of years are now seeing the reverse trend when they visit jewellery shops. People who had planned a wedding purchase are asking the jewellers whether the prices will settle at this new level or keep going up.
The 5% duty on jewellery findings comes under the same notification. Findings are the tiny parts like clasps, hooks and settings that go into finished ornaments, and manufacturers will now have to add this duty to their costs.
How the duty reaches jewellery, ETFs and digital gold
So buyers never see it as a separate line on the bill. The making charges and GST are shown separately, but the duty is already part of the base metal price.
Gold ETF investors are in a different position. The prices of the ETF units were expected to reprice with a lag to reflect the higher duty. Individuals who bought units earlier are therefore seeing a change in their holdings without having done anything.
Digital gold has also seen a rush of buying since the announcement. It was described as unregulated as of October 2026, and this is a point that many first time buyers of small quantities may not have looked at closely.
The three products can be looked at as follows:
- Jewellery: the duty is inside the quoted gold rate, and making charges are added on top.
- Gold ETF: the unit price is expected to go up after some delay as the duty gets passed on.
- Digital gold: the demand for it is on the rise, but presently there is no regulatory body overseeing it.
The increase triggered purchases across jewellers, ETFs, and digital gold at the same time, proving that families are not moving in just one direction.
When the import duty rises, the domestic price is expected to rise first, and the ETF unit price then follows after a gap. Investors comparing products on the same day may therefore see the ETF price and the jewellery rate at different stages of adjustment.
Now, making charges behave in a peculiar way. Each jeweller decides them independently, and they are added onto the price of the metal. When the making charge is calculated as a share of the metal value, the amount you pay will rise whenever the gold rate goes up after the duty hike.
Digital gold remains distinct from all of this. Reports mention a buying frenzy on these platforms, yet there is presently no regulatory body overseeing this product, and the protective measures that are applied to a gold ETF listed on the A regulated electronic marketplace in Mumbai where buyers and sellers trade shares and other securities at publicly visible prices. Read the full meaning of NSE (National Stock Exchange) or BSE Ltd, formerly the Bombay Stock Exchange, is a Mumbai based electronic exchange where shares and other securities are traded under SEBI oversight. Read the full meaning of BSE (Bombay Stock Exchange) are not available in the same format.
It is likely that the ETF and fund route will attract more money in the coming months. However, a complete shift away from jewellery looks less certain, since a large part of gold buying in India is done for weddings, gifting and family occasions, and these needs are met with ornaments. A unit held in a A demat account is an electronic account that holds an investor's shares, bonds, ETFs and mutual fund units in digital form instead of paper certificates. Read the full meaning of Demat Account cannot be given to a bride or handed over at a ceremony.
Jewellers have also noticed this buying pattern and many of them keep giving the daily rates to customers as they decide how many pieces to buy. The prices of ETF units during the next few trading sessions will show how much of the duty has already been reflected.
What analysts expect next, and the risks
Analysts from Kotak Securities, Capitalmind AMC and INVasset PMS forecast that the inflows into gold ETFs will accelerate over the next 2-3 quarters. They also predict a shift from jewellery toward financial gold, as investors start favouring products that can be held in a demat account.
Same expectation is being discussed by many families who had earlier kept gold only in the form of ornaments and coins. Some of them are now asking their financial distributors about ETF units, while others are waiting to see how the prices behave over the coming weeks.
ICICI Direct, as noted earlier, expects domestic gold prices to move higher after the duty hike. Higher domestic prices will be reflected in the jeweller's daily rate, in the ETF unit price and in the rates of digital gold platforms, though not necessarily on the same day.
The shift that the analysts describe is an expectation, and it is not yet visible in the data for the full period. Gold buying in India has many reasons behind it, and the pattern of purchase for weddings and family occasions may not change at the same speed as the investment flows.
The question of illegal shipments also lingers. According to the BigGo report which cites Mint, the 15% difference between the international price and the domestic price creates a clear arbitrage opportunity, encouraging gold to be brought in outside the official channels. This smuggling risk worries both the regulators and the jewellery buyers.
Jewellers who import through the legal route will carry the full duty in their costs, while gold that enters without duty can be sold at a lower rate. The customs authorities have been dealing with this problem in earlier years also, and Budget 2024 had reduced the duty partly with this objective.
Alongside this, individuals who buy from unorganised sellers at rates that look lower than market may not know how the metal reached the shop. Organised jewellers and the exchanges offer bills, hallmarking and listed units, and these are the points that regulators have been asking investors to look at while choosing a product.
The final outcome will depend on few specifics that are not yet clear. The new 15% is split as 10% basic duty and 5% cess, up from the earlier 5% basic duty and 1% cess. The split is set out in the Finance Ministry customs notification, which is the number to check for any later change. Whether the ETF prices have fully reflected the duty is another point investors are still checking.
