Government raises duty drawback on Gold, Silver to promote exports

NEW DELHI : The Government’s decision to increase the drawback rate on select gold and silver article will help moderate the impact of the proposed US tariff and sliding global demand for jewellery.

The Customs has notified that gold jewellery drawback rate has been increased to ₹405.40 per gram from ₹335.50 of net gold content. For silver jewellery and related articles the rate has gone up to ₹4950.03 per kilogram from ₹4468.10 of net silver content.

A duty drawback is a refund of customs duties paid on inputs used to manufacture goods that are later exported. This will enable jewellery exporters to offest soaring raw material costs and maintain profitability. 

In recent times, gold prices have surged by 24% to $3,230 an ounce. Domestic gold prices have followed suit, climbing 23% year-to-date to ₹93,217 per 10 grams. Hence, the new plan will safeguard jewellery manufacturers from the global spike in gold prices. 

Tariff Tensions and Global Demand Woes

Although the US has temporarily paused a 27% reciprocal tariff on Indian gem and jewellery imports for 90 days, uncertainty continues over the long-term trade relationship. Currently, the US levies duties as high as 32–34% on gold and platinum jewellery, 40.5% on silver jewellery, and up to 38% on items like imitation jewellery and lab-grown diamonds. These high tariffs have strained India’s jewellery export volumes.

Export Trends and Outlook

 In FY25, gold jewellery exports fell slightly to $11.21 billion from $11.23 billion in FY24, This was primarily due to geopolitical tensions and global trade disruptions. Overall gem and jewellery exports dropped 12% to $28.50 billion in FY25. 

However, the industry projects a 12% rise in gold jewellery exports in FY26, bolstered by steady global demand and policy support.

Conclusion

 The hike in drawback rates is a strategic move to maintain India’s competitive edge in the global jewellery market. Amid volatile prices and uncertain trade ties, this policy offers a much-needed cushion to Indian exporters, ensuring continued resilience and growth.