As the Union Budget 2026-27 approaches, India's gems and jewellery industry is presenting a comprehensive wishlist of policy reforms aimed at easing cost pressures, supporting domestic demand, and strengthening the country's position in global markets. Against the backdrop of elevated gold prices, shifting global supply chains and rising trade barriers, industry leaders believe targeted government support can significantly impact growth, exports and employment in the sector.

Import Duty Rationalisation and Customs Simplification

The sector's primary expectation centres on rationalising import duties on essential raw materials including gold, silver, platinum and coloured gemstones. Given India's heavy dependence on imports for these inputs, current higher duties directly inflate manufacturing costs and weaken export competitiveness. Industry participants argue that reviewing the existing duty structure would help lower input costs, improve pricing power for exporters and enable Indian jewellery manufacturers to compete more effectively with global peers.

Simplification of customs procedures represents another critical demand. The industry seeks faster clearances, risk-based checks and greater use of digital documentation to significantly reduce delays and logistics costs, particularly for exporters operating on tight delivery schedules. Streamlined processes are viewed as essential for improving ease of doing business and supporting India's ambitions as a global jewellery manufacturing hub.

GST Reform and Consumer Affordability

Domestic tax reform remains high on the industry's priority list, with GST rationalisation being a key focus area.

"On the domestic front, streamlining GST on jewellery, including a reduction from the current 3 per cent to around 1-1.25 per cent, will lower the cost to consumers, encourage formal sales, and broaden the tax base," said Mangesh Chauhan, Managing Director, Sky Gold & Diamonds. With consumers becoming increasingly price-sensitive amid high gold and silver prices, industry leaders view tax rationalisation as a crucial lever to support demand stability.

Innovative Financing and Gold Mobilisation

The sector has specifically sought regulated small-ticket EMI options for gold jewellery purchases, which could help consumers better manage purchases in the current high-price environment. Such initiatives are expected to support steady demand while ensuring transparency and consumer protection.

A significant focus area involves mobilising existing household gold reserves. With India estimated to hold nearly 24,000 tonnes of gold in households and old gold exchange now accounting for a substantial share of jewellery transactions, the industry seeks innovative policy mechanisms to bring more idle gold into the formal economy. This approach could unlock long-term value, reduce import dependence and support domestic recycling initiatives.

Infrastructure and Skills Development

The industry is seeking enhanced policy support for skills development and infrastructure improvements. Key areas include:

• Focused vocational training programmes for karigars
• Investment in export cluster infrastructure
• Incentives for technology adoption to improve productivity and quality standards

Suvankar Sen, MD & CEO, Senco Gold, has called for greater flexibility for SEZ units to cater to domestic demand, which could help optimise capacity utilisation and support employment generation.

Tourist GST Refund Scheme

The industry is pushing for early rollout of the Tourist GST Refund scheme at major airports. This initiative is viewed as a strategic move to retain luxury jewellery spending within India and boost retail sales to foreign visitors, potentially enhancing the sector's contribution to the country's tourism and export revenues.

These comprehensive policy demands reflect the industry's efforts to navigate current market challenges while positioning India as a more competitive player in the global gems and jewellery market.

Kalyan Jewellers shares edged 1.00% lower to hit an intraday low of ₹515.50 on the BSE on Thursday, despite the company reporting robust financial performance for the third quarter. The jewellery retailer's stock movement contrasted with its strong operational metrics, highlighting mixed market sentiment in the sector.

Strong Q3 Financial Performance

The company delivered impressive growth across all business segments during the third quarter. The following table shows the key performance metrics:

Festive demand drove strong traction across categories in India, resulting in broad-based growth despite gold price volatility. International operations logged significant growth, with the Middle East markets contributing 28.00% growth primarily driven by same-store sales expansion.

Expansion Strategy and Store Network

Kalyan Jewellers continued its aggressive expansion strategy during the quarter, adding substantial retail presence across multiple markets:

As of December 31, 2025, the company's total showroom count reached 469 across India and international markets, including the Middle East, the USA, and the UK. The expansion reflects the company's commitment to capturing market share in key growth regions.

Analyst Outlook and Stock Performance

Despite the recent price decline, analysts remain optimistic about the company's prospects. Domestic brokerage firm Motilal Oswal maintains a bullish view on the stock, assigning a 'Buy' rating with a target price of ₹650.00, representing an upside potential of 25.00% from the stock's previous closing price of ₹520.75.

The mixed performance reflects broader market volatility and sector-specific challenges, though recent trends show improvement in investor sentiment toward the jewellery retail segment.