Budget 2026: How Import Duty Cuts Impact Motisons Jewellers

Introduction: A Glimmer of Relief for Jewellers

The Union Budget 2026, presented on February 1, 2026, has introduced several key measures aimed at bolstering the gems and jewellery sector, a significant contributor to India's exports and employment. For companies like Jaipur-based Motisons Jewellers Ltd., the announcements provide a much-needed tailwind amidst volatile precious metal prices and challenging global demand. The budget's focus on rationalizing import duties on key raw materials and extending support for emerging segments like lab-grown diamonds (LGDs) is set to directly impact the operational efficiency and financial health of industry players.

Lower Import Duties to Polish Profit Margins

A standout announcement in Budget 2026 is the reduction of import duty on cut and polished diamonds from 5% to 2.5%. This move directly addresses a long-standing demand from the industry to lower input costs. For Motisons Jewellers, which has a diverse portfolio including diamond and polki jewellery, this measure is particularly beneficial. The reduction in customs duty will lower the procurement cost of diamonds, a critical raw material. This cost advantage can either be passed on to consumers to stimulate demand in a price-sensitive market or be retained by the company to improve its gross profit margins. Given that Motisons has demonstrated strong profit growth of 68.7% CAGR over the last five years, this policy support will help sustain that momentum.

Strategic Support for Lab-Grown Diamonds

Recognizing the growing global market for lab-grown diamonds, the government has extended the customs duty exemption on LGD seeds, which was previously set to expire on March 31, 2026. This policy continuity is crucial for domestic manufacturers aiming to scale up production and enhance their competitiveness. For retailers like Motisons, this ensures a stable and cost-effective supply of LGDs, allowing them to expand their offerings in this high-growth category. As consumers become more accepting of LGDs, having a robust domestic manufacturing ecosystem, supported by such fiscal measures, provides a strategic advantage for the entire value chain.

Enhancing Export Competitiveness and Liquidity

The budget also introduced measures to improve the ease of doing business, which will benefit companies with export operations. While Motisons' export sales are currently a small fraction of its total revenue, proposals for a comprehensive and digitized tax refund mechanism for GST and customs duties can significantly improve working capital management. Faster refunds reduce the capital locked in the system, a critical factor for a business with high inventory holding periods, as seen in the jewellery sector. This improved liquidity allows companies to manage their finances more efficiently and invest in growth opportunities.

Financial Implications for Motisons Jewellers

The direct financial impact of these budget announcements on Motisons Jewellers is expected to be positive. The company's operating profit margin (OPM), which stood at approximately 15% in FY2025, could see an improvement due to lower raw material costs. Furthermore, the company has been actively reducing its debt, and enhanced profitability will strengthen its balance sheet further. The debt-to-equity ratio has already improved significantly, and better cash flows from operations will support this deleveraging trend. Investors will likely view these pro-industry measures favorably, which could positively influence market sentiment towards the stock.

Key Budget 2026 Announcements for the Jewellery Sector

Broader Industry and Market Outlook

The measures announced in Union Budget 2026 are poised to strengthen the entire Indian gems and jewellery ecosystem. By reducing the cost of key inputs and simplifying compliance, the government aims to make Indian jewellers more competitive on the global stage. This is particularly important as the industry has faced headwinds from geopolitical tensions and subdued demand in key export markets like the US and China. For Motisons Jewellers, these supportive policies create a more favorable operating environment, enabling it to leverage its strong brand presence in Jaipur and expand its reach. The focus on both traditional and emerging jewellery segments in the budget aligns well with the company's diverse product portfolio.

Conclusion: A Clear Path for Growth

In summary, Union Budget 2026 has delivered a set of targeted and meaningful reforms for the gems and jewellery sector. For Motisons Jewellers, the reduction in import duties and continued support for LGDs are direct positives that can enhance profitability and support strategic growth. As the company continues to build on its strong financial performance and reduce debt, these budgetary tailwinds provide a solid foundation for the upcoming fiscal year. The focus will now shift to the effective implementation of these policies and how well the industry capitalizes on these opportunities.