Government cuts duty drawback rates on gold, silver jewellery exports

• Government cuts duty drawback rates by 3.1 per cent for gold jewellery and 9 per cent for silver jewellery exports

• Gold refunds fall to Rs 1,794.11 per gram, while silver refunds drop to Rs 26,859.02 per kg

• The cuts could squeeze exporters’ profit margins, though strong global demand may limit the impact

The central government on Friday reduced duty drawback rates on exports of gold and silver jewellery and other precious metal products, lowering the refunds available to exporters and potentially putting pressure on their profit margins.

According to a notification issued by the Ministry of Finance, the duty drawback rate for gold jewellery has been cut by around 3.1 per cent, while the rate for silver jewellery and other silver products has been reduced by approximately 9 per cent.

Following the revision, the refund rate for gold jewellery exports has been lowered from Rs 1,851.99 per gram to Rs 1,794.11 per gram. For silver jewellery and other silver items, the rate has been reduced from Rs 29,501.09 per kilogram to Rs 26,859.02 per kilogramme.

The reduction means exporters will receive lower duty refunds on eligible shipments than under the previous rates, potentially increasing the effective cost of exporting precious metal products.

Duty drawback is a mechanism through which exporters receive refunds of eligible customs duties and other specified levies paid on inputs used to manufacture goods for export.

The system aims to reduce the tax burden on exported products, lower production costs and help domestic manufacturers remain competitive in international markets.

A reduction in drawback rates can therefore affect exporters’ cost calculations, particularly in sectors where precious metals account for a significant share of the overall product value.

The latest revision follows a substantial increase in duty drawback rates announced by the government in July 2026.

At the time, the refund rate for gold jewellery exports was raised from Rs 773.17 per gram to Rs 1,851.99 per gram. The rate for silver jewellery and other silver products was increased from Rs 14,990.66 per kilogramme to Rs 29,501.09 per kilogramme.

The latest cuts partially reverse those increases, reducing the refunds available to jewellery exporters compared with the rates introduced in July.

The revised rates could put pressure on exporters’ margins by reducing the amount they recover through duty drawback. The extent of the impact will depend on production costs, export prices, international demand and individual businesses’ ability to absorb the reduction.

However, industry experts believe the effect on export performance could remain limited if global demand for Indian jewellery continues to be strong.

Exporters will be watching market conditions closely to assess whether sustained overseas demand can offset the reduction in government refunds.

With IANS inputs