A near 18% tax burden on gold imports and the rise of a digitally enabled “Gold as a Service” model could redefine India’s gold ecosystem in the coming years, according to a Motilal Oswal Financial Services Expert Speak report stated, featuring Sachin Jain, Regional CEO–India at the World Gold Council.

The report highlights that while gold demand remains resilient despite record prices, policy changes and digital innovation could fundamentally alter India’s gold market structure over the coming years.

Import tax burden

According to the report, the Indian government has effectively increased the overall tax burden on gold imports to around 18%, comprising 10% basic customs duty, 5% cess, and 3% GST. The report notes that this marks a significant rise from earlier levels and may create unintended consequences for the jewelry sector.

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The report cautions that higher import duties could widen price differences between formal and unofficial channels, potentially reviving gold smuggling and the grey market ecosystem. It adds that such trends could undermine years of progress in industry formalization by creating a two-tier market split between regulated and cash-based transactions.

The report also notes a recent policy shift affecting silver imports, with imports moving into a restricted category requiring licensing approval from the Directorate General of Foreign Trade (DGFT).

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Gold demand remains resilient

Despite gold touching record highs, the report says Indian consumers continue displaying strong buying interest. Historically, Indian buyers have shown greater sensitivity to price stability than absolute price levels. Instead of waiting for steep corrections, purchasing often resumes once price volatility settles.

Wedding demand remains a major structural support, accounting for 58%–62% of total jewelry consumption, according to the report.

The report also identifies changing buying behavior, with households increasingly purchasing gold bars and coins as investment assets, with the possibility of converting them into jewelry later. This signals a gradual separation between gold’s investment function and ornamental use.

Organised retail and digital transformation

The report notes that India’s jewelry market remains highly fragmented with nearly 350,000 jewelers, but organized retail is gaining share rapidly. Over the past five years, the market share of organized jewelry retail has increased from roughly 9% to 36%, driven by growing consumer preference for transparency, standardised pricing, and trusted brands.

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Younger consumers are increasingly preferring formalized retail channels, accelerating market consolidation.

‘Gold as a Service’ model

One of the report’s most forward-looking themes is the emergence of a digitally enabled “Gold as a Service” ecosystem. It suggests technological developments such as blockchain-based traceability, tokenization, and digital ownership infrastructure could transform gold from a largely physical asset into a more transparent, liquid, and integrated financial instrument.

The report adds that global trends—including rising central bank purchases, de-dollarization, and sovereign debt concerns—continue strengthening gold’s role as a strategic long-term asset. It also points to the World Gold Council’s “Swarn India 2047” roadmap, which aims to deepen domestic sourcing, gold monetization and market development in India.

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Published on: May 19, 2026 1:53 PM IST