New Delhi: The government’s decision last July to reduce import duties on gold has had a significantly positive impact on the industry, and any increase in tariffs in the upcoming Budget may have adverse effects, said the World Gold Council (WGC).

In an apparent request not to raise import duties on the precious metal ahead of the 2025-26 Budget, Sachin Jain, Regional CEO, India, WGC, said, “Any increase in import duties in the upcoming budget may have adverse effects, potentially leading to an increase in smuggling, higher domestic gold prices, and pushing the industry backwards.”

“It is imperative that stakeholders, including government bodies, industry players, and financial institutions, collaborate to sustain this positive momentum. By fostering a synergetic environment, we can ensure that the gold industry continues to thrive, innovate and contribute significantly to India’s economic development and prosperity,” added Jain in a pre-budget note.

Similar to the last decade, Jain said they were expecting progressive, people-friendly, and industry-supportive policy announcements. The gold industry contributes an estimated 1.3 percent to India’s GDP and employs approximately 2-3 million people. In Budget 2024, presented in July, the total customs duty on gold was lowered from 15 percent to 6 percent.

WGC has asserted that the move helped reduce unofficial imports, stabilize official channels, and encourage domestic purchasing of gold. The reduction in taxes on gold has led to a more organized and transparent industry, resulting in a stronger gold market.

Meanwhile, the budget session of Parliament will begin on January 31 and, according to schedule, will end on April 4. The budget will be presented on February 1. The Economic Survey for 2024-25 will be tabled on January 31, followed by the Budget presentation on February 1.

All eyes will be on the key announcements and the government’s forward-looking economic guidance for the remainder of the Modi 3.0 tenure. This upcoming budget comes in the backdrop of weak GDP numbers and weak consumption in the economy.