As India moves closer to the Union Budget 2026, the jewellery sector has stepped into the policy spotlight with a clear and unified demand: rationalisation of Goods and Services Tax (GST) on jewellery. Industry leaders, founders, and designers continue to flag taxation as a critical pressure point at a time when gold prices remain elevated and global uncertainty keeps input costs volatile. For a sector that balances cultural significance, discretionary spending, and deep manufacturing linkages, GST reform no longer represents a peripheral request—it signals a structural necessity.
The jewellery industry contributes significantly to employment, exports, and domestic consumption. Millions of artisans, karigars, designers, retailers, and logistics partners depend on stable demand and predictable margins. Yet rising gold prices, driven by global geopolitical tensions, inflationary trends, and currency movements, have squeezed affordability for consumers and liquidity for brands. In this environment, GST acts as a cost multiplier rather than a neutral tax mechanism.
Industry stakeholders argue that Budget 2026 offers an opportunity to recalibrate tax policy in favour of sustainable growth. They seek relief not as a concession but as a strategic intervention that can unlock demand, improve compliance, and strengthen the formal economy.
High Gold Prices Reshape Consumer Behaviour
Gold prices have climbed to historic highs over the past year. Global central bank buying, geopolitical conflicts, and persistent inflation fears have pushed investors towards safe-haven assets. Indian jewellery brands now operate in a pricing environment that demands precision and restraint.
Consumers increasingly postpone purchases, downtrade to lighter designs, or limit buying to weddings and festivals. Even loyal customers approach jewellery counters with heightened price sensitivity. GST, applied on top of already expensive raw material costs, amplifies this hesitation.
A lower GST rate would immediately soften the final ticket price for consumers. That reduction could restore elasticity in demand, especially among middle-income households that traditionally drive volume growth in the sector. Brands believe that Budget 2026 can revive footfalls by addressing this friction point directly.
Taxation and the Cost Structure of Jewellery Brands
Jewellery businesses operate with inventory-heavy models. Gold purchases require significant upfront capital, while design cycles, manufacturing timelines, and retail turnover stretch cash flows. GST impacts these cycles at multiple stages—from procurement to sale—often locking working capital for extended periods.
Founders and entrepreneurs feel this pressure most acutely. Smaller and mid-sized brands lack the balance sheet flexibility that large legacy players enjoy. GST rationalisation could free liquidity, reduce dependence on external borrowing, and allow brands to reinvest in design, technology, and retail expansion.
Ms. Disha Shah, Founder and Designer, DiAi Designs, articulates this concern from a founder’s perspective. She says:
“With gold prices at elevated levels driven by global volatility, taxation has become a critical cost amplifier in jewellery. A reduction in GST on jewellery would directly improve affordability, stimulate demand elasticity, and enhance formalisation within the sector. From a founder’s lens, rationalising GST can support consumer sentiment, improve working capital cycles for brands, and enable sustainable growth across the value chain.”
Her perspective reflects a wider sentiment across the industry. Entrepreneurs seek policy clarity that aligns taxation with the economic realities of jewellery manufacturing and retail.
GST Reform and Sector Formalisation
India’s jewellery sector continues to straddle organised and unorganised markets. While large retailers and branded players comply with tax norms, many small operators still function outside formal frameworks. High GST rates discourage full compliance and incentivise cash-based transactions.
A rationalised GST structure could accelerate formalisation by narrowing the cost gap between compliant and non-compliant businesses. Lower rates would encourage more players to register, file returns, and integrate into the formal supply chain. That shift would strengthen transparency, improve traceability, and expand the tax base over time.
Formalisation also supports consumers. Buyers gain access to certified products, transparent pricing, and grievance mechanisms. Budget 2026 can therefore deliver a dual benefit by supporting industry growth while reinforcing consumer trust.
Consumer Sentiment and Wedding Demand
Jewellery purchases in India often coincide with weddings, festivals, and life milestones. These emotional drivers sustain the sector even during economic slowdowns. However, persistent price inflation has begun to influence decision-making even in these traditionally resilient segments.
Families now plan purchases with stricter budgets. Many opt for lighter jewellery or postpone non-essential buys. GST relief could revive sentiment ahead of the wedding-heavy calendar in 2026 and beyond. A modest tax reduction could translate into meaningful savings for consumers without distorting market dynamics.
Industry leaders argue that demand revival through tax reform would generate higher volumes, offset revenue losses, and stimulate allied sectors such as gems, logistics, packaging, and retail real estate.
Export Competitiveness and Global Positioning
India plays a leading role in global jewellery manufacturing and exports, particularly in diamond cutting, gold jewellery, and handcrafted pieces. However, rising domestic costs affect export competitiveness indirectly by straining working capital and increasing financing costs.
GST rationalisation could ease these pressures and allow exporters to price more competitively in international markets. As global demand stabilises, Indian brands can leverage policy support to expand market share and strengthen their global footprint.
Budget 2026 presents an opportunity to align domestic tax policy with India’s export ambitions, especially as the government continues to promote “Make in India” and value-added manufacturing.
What the Industry Expects from Budget 2026
The jewellery sector does not seek sweeping subsidies or short-term incentives. Instead, it seeks rational, predictable taxation that reflects the sector’s economic realities. Industry bodies and founders expect Budget 2026 to acknowledge the unique characteristics of jewellery as both an investment and consumption product.
GST relief stands at the top of the wishlist, but stakeholders also look for simplified compliance processes, faster input tax credit cycles, and policy consistency. Together, these measures can create a stable operating environment that encourages long-term investment.
Conclusion
As discussions around Union Budget 2026 gain momentum, the jewellery sector has articulated its priorities with clarity and urgency. High gold prices, shifting consumer behaviour, and tight working capital cycles have converged to make GST reform a strategic imperative.
Voices like that of Ms. Disha Shah highlight how tax rationalisation can influence affordability, sentiment, and sustainability across the value chain. Budget 2026 holds the potential to recalibrate policy in a way that supports growth, formalisation, and consumer confidence.
If policymakers choose to act, the jewellery sector stands ready to translate relief into demand, compliance, and long-term economic value.
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