India cuts gold import tax in boost to local jewelry makers

India cut its import tax on gold to support jewelry manufacturing in the world’s second-biggest consumer of the precious metal.

The government slashed the duty on the yellow metal to 6% from 15%, Finance Minister Nirmala Sitharaman said in her annual budget speech in New Delhi on Tuesday. The aim is to “enhance domestic value addition in gold and precious metal jewelry in the country,” she said.

The move will provide some relief to consumers after a surge in local gold prices, which have tracked a global rally. India buys almost all of its bullion from overseas, and the metal is often smuggled into the country to avoid the levy.

The customs duty break may “lead to a decline in domestic prices and perhaps lift demand,” said Hareesh V, head of commodities at Geojit Financial Services.

Shares of top jewelery firm Titan Co. rose as much as 7.2%, the biggest intraday jump since July 2022. Kalyan Jewellers India Ltd. climbed as much as 6.1%, while Senco Gold Ltd. and PC Jeweller Ltd. advanced 12% and 5%, respectively. 

The government also trimmed the import levy on silver to 6% from 15%, while the tax on platinum and palladium was cut to 6.4% from 15.4%, according to the budget documents.