Govt cuts gold duty drawback rate by 3.1%, silver by nearly 9%
Synopsis
Just months after handing India's jewellery exporters a landmark duty drawback boost in July, the Centre has reversed course — trimming the gold refund rate by 3.1% and slashing the silver rate by nearly 9%. The move compresses margins for one of India's most labour-intensive export sectors, even as global demand for precious metal jewellery remains relatively firm.
Key Takeaways
The Ministry of Finance on 16 October 2026 cut the duty drawback rate for gold jewellery exports by 3.1% , from ₹1,851.99/gram to ₹1,794.11/gram .
The rate for silver jewellery and silver products was reduced by approximately 9% , from ₹29,501.09/kg to ₹26,859.02/kg .
The revision partially reverses the sharp hike granted in July 2026 , when gold rates were raised from ₹773.17/gram and silver from ₹14,990.66/kg .
Both rates remain significantly above their pre-July levels despite the latest cuts.
Industry experts believe limited impact on export volumes if global demand stays strong.
The Centre on Friday, 16 October 2026, reduced the duty drawback rates applicable to the export of gold and silver jewellery and other precious metal products, according to a notification issued by the Ministry of Finance. The revision will lower the refund benefit for Indian jewellery exporters, directly compressing their profit margins.
Revised Rates at a Glance
Following the notification, the duty drawback rate for gold jewellery exports has been cut by 3.1% — from ₹1,851.99 per gram to ₹1,794.11 per gram. The reduction is sharper for silver: the rate for silver jewellery and other silver products has been slashed by approximately 9%, falling from ₹29,501.09 per kilogram to ₹26,859.02 per kilogram.
What Is Duty Drawback and Why Does It Matter
Duty drawback is a mechanism that allows exporters to claim a refund of customs and other duties paid on raw materials or inputs used in manufacturing goods for export. Its primary purpose is to enhance export competitiveness by reducing the effective cost of production for overseas buyers. A lower drawback rate means Indian jewellery exporters recover less from the government on each shipment, squeezing unit-level returns.
Context: A Sharp Reversal from July's Relief Package
The cut comes just months after the government had provided significant relief to the sector. In July 2026, amid rising commodity costs and global trade uncertainties, the Centre had sharply hiked the drawback rates — raising the gold jewellery refund from ₹773.17 per gram to ₹1,851.99 per gram, and the silver rate from ₹14,990.66 per kilogram to ₹29,501.09 per kilogram. The latest revision partially walks back those gains, though both rates remain substantially above pre-July levels.
Impact on Exporters and the Industry Outlook
The decision will reduce the financial gains available to Indian jewellery exporters compared to the July regime, and could weigh on the margins of smaller exporters who depend heavily on drawback refunds to stay price-competitive in global markets. However, industry experts reportedly believe that if demand in key international markets remains strong, the overall impact on export volumes could remain limited. India is among the world's largest exporters of gold and silver jewellery, and the sector employs millions of artisans and craftspeople, making policy shifts of this nature closely watched across the trade ecosystem.
What Exporters Are Watching
Industry stakeholders will be monitoring whether the government provides any offsetting relief — such as adjustments to other export incentive schemes — in the coming weeks. Global gold and silver prices, which influence both raw-material costs and demand patterns, will also be a critical variable as exporters recalibrate their pricing strategies for the forthcoming festive and wedding season in export markets.
Point of View
The government is already trimming those benefits. That July hike more than doubled the gold drawback rate; the current cut is modest by comparison, but the reversal signals that the Centre is recalibrating as global commodity prices — particularly gold — have surged to record highs, narrowing the fiscal rationale for high refund rates. The real concern for the sector is policy predictability: exporters, especially smaller units, build pricing models around stable drawback schedules, and frequent revisions introduce uncertainty that larger players can absorb but smaller artisan-led exporters cannot. The government has not yet outlined a compensatory measure, which will be the metric to watch.
NationPress
16 Oct 2026
Frequently Asked Questions
What is duty drawback and why does it affect jewellery exporters?
Duty drawback is a government refund of customs and other duties paid on raw materials used to manufacture exported goods. For jewellery exporters, it directly reduces effective production costs, so a lower drawback rate means smaller refunds and tighter profit margins per shipment.
By how much has the gold jewellery duty drawback rate been cut?
The duty drawback rate for gold jewellery exports has been reduced by 3.1%, from ₹1,851.99 per gram to ₹1,794.11 per gram, as per the Ministry of Finance notification dated 16 October 2026.
How significant is the silver rate cut compared to gold?
The silver cut is steeper — approximately 9% — bringing the rate down from ₹29,501.09 per kilogram to ₹26,859.02 per kilogram. This is a larger proportional reduction than the 3.1% cut applied to gold jewellery.
How do the new rates compare to where they stood before July 2026?
Despite the latest reduction, both rates remain far above pre-July 2026 levels. The gold rate was as low as ₹773.17 per gram before the July hike, and the silver rate stood at ₹14,990.66 per kilogram — meaning exporters are still better off than they were earlier this year.
Will this affect India's jewellery export volumes?
Industry experts reportedly believe the impact on export volumes could be limited if global demand remains strong. However, exporters — particularly smaller units — may face margin pressure, and the effect will also depend on movement in global gold and silver prices in the months ahead.
