Budget today: Why it matters most to South India’s jewellery markets

At a time when gold prices are hovering near record highs, global volatility is unsettling currencies, and consumer spending is becoming increasingly value-conscious, the Union Budget 2026-27 is being seen as a critical inflection point for a sector that blends tradition with macroeconomics. Jewellery in India remains not just a discretionary purchase, but a financial asset and a cultural mainstay, playing a central role in household savings across income segments.

It is pertinent to note that in the Union Budget 2025-2026, the government had taken steps to support demand by reducing customs duty on imported jewellery from 25% to 20% and sharply cutting duties on platinum findings, making select categories more affordable. However, duties on gold imports were left unchanged. Against this backdrop, industry leaders are now calling for Budget 2026 to balance fiscal discipline with targeted reforms, including rationalisation of gold import duties and the GST structure, to improve affordability, encourage formalisation and bolster consumer confidence.

Echoing this sentiment, Suvankar Sen, MD & CEO, Senco Gold Ltd, said that despite volatility in gold and silver prices, consumer interest in jewellery has remained resilient, though more carefully planned. “Gold jewellery continues to hold enduring significance as a symbol of heritage and long-term wealth creation. With prices expected to remain elevated, policy measures that enhance affordability will be critical to maintaining demand stability,” he said.

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Sen highlighted the role of structured financing and exchange mechanisms in sustaining consumption. “Regulated small-ticket EMI options and a review of the current 3% GST structure could meaningfully ease the consumer burden and encourage higher participation in the formal market,” he noted. He also pointed to the growing traction of old gold exchange, which now accounts for nearly 45% of transactions, adding that with household gold holdings estimated at close to 24,000 tonnes, a continued policy focus on mobilising idle gold could unlock significant long-term value for the economy.

With the gems and jewellery sector contributing nearly 6–7% to India’s GDP and employing over 46 lakh workers and artisans, expectations from Budget 2026 extend well beyond incremental tax tweaks to a broader policy vision that supports consumption, strengthens MSMEs and reinforces India’s position in the global gems and jewellery value chain.

The stakes are particularly high in South India, which continues to be the country’s largest and most influential gold consumption market. States such as Tamil Nadu, Kerala, Karnataka and Andhra Pradesh dominate organised jewellery retail, hosting some of India’s biggest homegrown chains and often setting national trends in design, demand cycles and retail innovation.

Against this backdrop, Joy Alukkas, Chairman and Managing Director of Kerala-based Joyalukkas Group, said the upcoming Budget presents a critical opportunity for the sector amid global economic uncertainty. He said the Budget should strike a fine balance between supporting growth and maintaining fiscal discipline, especially as the rupee remains under pressure due to high US tariffs, lower export inflows and cautious foreign investor sentiment.

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At the same time, Joy called for bolder structural reforms, “While import duty has come down to 6% from 15%, along with 3% GST, high global prices and domestic levies continue to inflate costs and suppress demand, especially in rural markets where jewellery remains a key household savings instrument. Reducing the duty to 4% would align domestic prices with international levels, curb smuggling and accelerate formalisation,” he said.

As per Bhima Gold company spokesperson, “In South India, gold buying is closely tied to life events like weddings, family milestones and long-term household saving habits. While customers understand price fluctuations, affordability still plays an important role in shaping when and how they buy. Any rationalisation of import duties or taxes on gold would therefore be the most meaningful Budget intervention, as it can directly ease the burden on families and improve purchase sentiment across the region.”

Experts told e4m that lower duties would reduce input costs, improve inventory turnover and provide meaningful relief to MSMEs and retailers. Measures such as GST rationalisation and deferred taxation on unrealised inventory gains would further aid transactions and exports, helping formalise millions of transactions while strengthening India’s ambition to emerge as a global jewellery hub.

Notably, for the jewellery industry, much of the Budget’s real-world impact will be felt first in South India, the country’s most organised gold consumption market. With deep-rooted cultural affinity for gold, high wedding-led demand and a strong presence of organised retail chains, southern states act as both consumption engines and trendsetters for the national market. Any policy move that affects pricing, financing or formalisation tends to show immediate traction in the South before rippling across the rest of the country.

Industry executives note that measures aimed at improving affordability, whether through duty rationalisation, GST review or structured financing options, could have an outsized impact in the region, where ticket sizes are higher and purchase decisions are closely tied to price sensitivity.

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At the same time, broader Budget allocations that strengthen agriculture, MSMEs, urban infrastructure and regional entrepreneurship in southern states are expected to directly translate into stronger jewellery demand, reinforcing the South’s role as the backbone of India’s organised jewellery retail ecosystem.

Highlighting this regional significance, Chetan Thadeshwar, Chairman & Managing Director, Shringar House of Mangalsutra, said, “South India plays a uniquely important role in India’s jewellery landscape as the largest and most influential gold consumption and organised retail jewellery market. Many of India’s leading jewellery retail brands originate from the South, and demand trends in this region often set the direction for the national market.”

“In the context of Budget 2026, the industry is looking at measures that strengthen consumer confidence, disposable incomes and overall economic activity in South India. Allocations that support agriculture, MSMEs, urban infrastructure and regional entrepreneurship in southern states will have a multiplier effect not just for local retailers, but for the entire Indian jewellery value chain, including manufacturers and wholesalers across the country. A Budget that fuels consumption in South India effectively becomes a growth engine for the Indian jewellery industry at large,” he added.

At a national level, the industry is broadly aligned on the need for a calibrated policy approach. From rationalising gold import duties and GST to enabling EMI-led affordability, regulating emerging formats such as digital gold, and accelerating the mobilisation of idle household gold, stakeholders believe Budget 2026-27 has the potential to address both cyclical pressures and long-term structural gaps.

Paul Alukkas, Managing Director, Jos Alukkas, said the upcoming Budget is being framed against a challenging global macroeconomic backdrop marked by currency volatility and rising working capital requirements. “Gold prices have hit all-time highs, driven by global safe-haven demand and a weaker rupee, even as the government remains keen to monetise India’s large idle gold stock to curb imports,” he said.

Paul added that industry bodies are seeking clear and well-defined regulation of digital gold to enhance consumer protection and support greater formalisation of the market. He added, “Consistent and forward-looking policies will help strengthen the sector and reinforce India’s position in the global gems and jewellery value chain,” he said.

As gold prices remain elevated and global volatility reshaping consumer behaviour, the forthcoming Budget is being closely watched for signals that could help the sector remain resilient, competitive and globally relevant — with South India once again setting the pace for the rest of the country.