Budget 2026 for Jewellery: Exporters Gain on Reforms, Retailers Miss Duty Cuts

Budget 2026 Focuses on Trade Facilitation, Sidesteps Direct Tax Relief

The Union Budget 2026-27 has delivered a mixed bag for India's gems and jewellery sector. While exporters have reason to cheer a series of customs reforms aimed at improving the ease of doing business, the domestic retail industry was left disappointed as its long-standing demands for reductions in import duties and Goods and Services Tax (GST) were not addressed. Finance Minister Nirmala Sitharaman's budget speech prioritized structural and procedural enhancements over direct fiscal concessions, signaling a strategic shift towards strengthening trade infrastructure and export competitiveness.

Key Budget Measures for Gems & Jewellery Exporters

The budget introduced several measures that directly benefit exporters by simplifying processes and reducing logistical hurdles. The government's focus on trust-based governance in customs is a significant step forward. Key announcements include:

• Extended Duty Deferment: The duty-deferment period for Tier-2 and Tier-3 Authorized Economic Operators (AEOs) has been extended from 15 to 30 days. This move will improve working capital management and cash flow for compliant and established exporters.
• Simplified Clearances: The budget outlined a vision for a single, interconnected digital window for clearances across all government agencies. This aims to reduce paperwork, minimize intervention, and accelerate the movement of goods, a critical requirement for the time-sensitive jewellery export business.

These reforms align with pre-budget recommendations from the Gem and Jewellery Export Promotion Council (GJEPC), which had highlighted the need for a modernized Customs Act to complement the benefits of Free Trade Agreements (FTAs).

E-commerce Exports Receive a Major Boost

In a significant and targeted move for the sector, the Finance Minister announced the complete removal of the ₹10 lakh per-consignment value cap on courier exports. This is a major win for jewellery exporters leveraging global e-commerce platforms to reach international customers. The removal of this cap unlocks the potential for shipping higher-value items seamlessly, reducing compliance burdens and making Indian jewellery brands more competitive in the direct-to-consumer online market.

Major Industry Demands Left Unaddressed

Despite the positive procedural changes, the budget did not meet the sector's primary expectations on the tax and duty front. Industry bodies like the GJEPC and the All India Gem and Jewellery Domestic Council (GJC) had vociferously campaigned for fiscal relief to counter high raw material costs and stimulate consumer demand.

The key demands that went unmet include:

• No Change in Gold Import Duty: The industry's request to lower the import duty on gold from the current levels was not accepted. This means the cost structure for raw gold remains high for domestic manufacturers and retailers.
• GST Rate Unchanged: The GJC's proposal to rationalize GST on gold and silver jewellery from 3% to around 1.25% did not feature in the budget announcements. High GST continues to be a significant component of the final price for consumers.
• No Duty Cut on Diamonds: The GJEPC's recommendation to reduce the import duty on cut and polished diamonds from 5% to 2.5% was also overlooked, impacting the cost competitiveness of diamond jewellery manufacturing.

Summary of Budget Impact: Expectations vs. Reality

Industry Demand/Expectation	Union Budget 2026 Announcement
Reduce Gold Import Duty	No change announced. Duty structure remains the same.
Reduce GST on Jewellery	No change announced. GST rate remains at 3%.
Simplify Customs Procedures	Multiple reforms announced, including extended duty deferment for AEOs and a single digital window.
Boost E-commerce Exports	The ₹10 lakh per-consignment value cap on courier exports has been completely removed.
Reduce Duty on Polished Diamonds	No change announced. Import duty remains at 5%.

Impact on Domestic Jewellery Retailers

For domestic retailers, the Union Budget 2026 offers little immediate relief. With gold prices remaining elevated globally, the unchanged import duty and GST rates mean that affordability will continue to be a major challenge. The lack of tax relief is likely to dampen consumer sentiment, particularly in the price-sensitive mass market segments. Retailers will have to continue navigating a high-cost environment, with sustained pressure on margins and demand.

Market and Investor Sentiment

Investor sentiment for the sector is likely to be bifurcated. Companies with a strong export focus, particularly those with AEO status or a significant e-commerce presence, are poised to benefit from the operational efficiencies introduced in the budget. Their stocks may see a positive reaction. Conversely, companies that are heavily reliant on the domestic retail market may face pressure, as the budget does not provide the demand-side stimulus the industry was hoping for. The overall market reaction will likely reflect this divide between export-oriented players and domestic-focused retailers.

A Strategic Shift Towards Structural Reforms

In conclusion, Union Budget 2026 marks a clear policy choice by the government. Instead of offering direct fiscal sops, the focus has been on implementing structural reforms to enhance the long-term competitiveness of India's export ecosystem. While these measures are undoubtedly beneficial for improving efficiency and reducing logistical friction, the immediate concerns of domestic retailers regarding high taxes and their impact on consumer demand remain. The sector will now look towards the implementation of these customs reforms while continuing to advocate for tax rationalization in the future.