Gems and jewellery retailers on Wednesday said imposing quantitative restrictions on gold and silver imports, rather than raising import duties, would be a more effective way to curb the country’s current account deficit (CAD).

According to industry players, increasing import duties often drives up prices in the domestic market, hurts small and medium-sized enterprises, whereas alternative measures such as import quotas or licensing limits on gold and silver would be more effective.

PNGS Reva Diamond Jewellery CEO Amit Modak said the government should have imposed quantitative restrictions on gold and silver imports rather than increasing import duties.

"The quantitative restrictions could have helped in the overall reduction of imports and also save foreign exchange, he said.

Further, Modak said the recycling of old gold and silver, held by people, should be encouraged and incentivised.

Jewellers feel the hike in import duty could impact jewellery volumes in the short term, though demand is expected to remain resilient.

Senco Gold & Diamonds MD and CEO Suvankar Sen said: “The volumes might get impacted by 10-15 per cent, but value-wise it will remain at a higher level. Consumers will buy lighter-weight jewellery,” he added.

Anjali Jewellers director Annargha Uuttiya Chowdhuury feels the latest increase may only have a limited impact on consumers.

“Gold in India continues to hold strong emotional, cultural, and investment value. Consumers planning fresh purchases are likely to maintain demand, particularly during weddings and festive occasions, viewing gold not only as an adornment but also as a long-term financial asset,” he said.

Chowdhuury added that higher duties may encourage organised gold recycling and strengthen the domestic circular gold economy, as a substantial portion of demand is already met through exchange and reuse of old gold.

Shares of jewellery companies declined after the announcement. Titan Company fell as much as 1.7 per cent after dropping more than 10 per cent over the previous two sessions, while Kalyan Jewellers India Limited slid as much as 6 per cent.