PC Jeweller & Budget 2026: Customs Reforms Boost, Duty Cuts Missed

Introduction: A Budget of Hopes and Misses

The Indian gems and jewellery sector, a significant contributor to the nation's exports and employment, approached Union Budget 2026 with a clear set of expectations. For companies like PC Jeweller Ltd., the primary hope was a reduction in import duties on gold and polished diamonds to counter record-high prices, stimulate consumer demand, and curb smuggling. However, the budget presented by the Finance Minister on February 1, 2026, delivered a mixed bag. While the industry's headline demand for duty cuts was unmet, the budget introduced a series of structural reforms aimed at improving the ease of doing business, which offers long-term operational benefits for the sector.

The Unaddressed Plea: Import Duties Remain Unchanged

The most significant development for PC Jeweller and its peers was what the budget did not contain. The industry, through bodies like the Gem & Jewellery Export Promotion Council (GJEPC), had strongly advocated for a reduction in the Basic Customs Duty (BCD) on gold from the current 6% and on cut and polished diamonds from 5%. The rationale was clear: elevated international gold prices have dampened domestic demand and made smuggling highly lucrative. A duty cut would have provided immediate price relief to consumers and improved the competitiveness of the organised sector.

The decision to maintain the status quo on import duties means that jewellers will continue to grapple with high input costs. For PC Jeweller, this implies that managing margins and stimulating sales volume in a price-sensitive market will remain a key operational challenge. The company's strategy of focusing on debt reduction and franchise expansion will become even more critical to navigate this high-cost environment.

A Silver Lining: Major Push for Customs Simplification

While the budget disappointed on the duty front, it delivered significant positives through a comprehensive overhaul of customs procedures. The Finance Minister announced several measures aimed at creating a trust-based system for faster and smoother movement of goods. These reforms are a direct benefit to an import-export intensive business like PC Jeweller.

Key measures include:

• Enhanced AEO Benefits: The duty deferment period for Tier 2 and Tier 3 Authorized Economic Operators (AEOs) will be enhanced, improving working capital management.
• Faster Clearances: A move towards a single digital window for approvals from various government agencies will reduce delays and compliance costs.
• Risk-Based Systems: Recognition of regular importers with trusted supply chains will minimize the need for frequent cargo verification, ensuring quicker turnarounds.

For PC Jeweller, these reforms translate into tangible benefits such as reduced logistics costs, a more predictable supply chain for imported raw materials like gold and diamonds, and faster processing of export consignments.

E-commerce Exports Get a Major Boost

In a landmark move for digital commerce, the budget announced the complete removal of the current value cap of ₹10 lakh per consignment on courier exports. This is a significant tailwind for companies like PC Jeweller that are expanding their digital footprint, including through their e-commerce platform. The removal of this cap opens up the global market for high-value, low-volume shipments, making it easier and more cost-effective to service international retail customers directly. This policy change directly supports export diversification and aligns with the company's efforts to leverage technology for growth.

Flexibility for SEZ Units

The budget also introduced a special one-time measure to allow manufacturing units in Special Economic Zones (SEZs) to sell a limited quantity of their products in the Domestic Tariff Area (DTA) at a concessional duty rate. While PC Jeweller primarily operates through its domestic retail network, this move provides greater operational flexibility to the manufacturing ecosystem, including potential partners or subsidiaries located in SEZs. It allows them to better manage capacity during periods of weak global demand, ensuring stability in the supply chain.

Market and Investor Outlook

For investors tracking PC Jeweller, the Union Budget 2026 presents a nuanced picture. The absence of a duty cut removes a potential short-term catalyst that could have boosted sales volumes. The stock's performance will continue to be linked to the company's internal turnaround efforts, such as debt reduction and operational efficiency.

However, the long-term impact of the customs and export reforms should not be underestimated. These structural changes will improve the fundamental operating environment for the entire sector. By reducing friction in trade, the government has provided a pathway for well-managed companies to enhance their competitiveness and profitability over time. PC Jeweller, with its established brand and expanding network, is well-positioned to leverage these procedural improvements.

Conclusion: A Foundation for Long-Term Efficiency

Union Budget 2026 can be summarized as a trade-off for the gems and jewellery sector. It withheld the immediate gratification of a duty cut but provided the building blocks for long-term, sustainable efficiency. For PC Jeweller, the path forward involves navigating the persistent challenge of high gold prices while capitalizing on the new opportunities presented by simplified customs and barrier-free e-commerce exports. The focus will now shift to how effectively the company can translate these procedural tailwinds into improved financial performance and shareholder value.