India has raised import tariffs on gold and silver from 6% to 15%, a policy change that market analysts say will primarily hit investment-focused purchases in the near term and create immediate pressure on jewellery retailers. Morgan Stanley, in a recent note, described the move as a short-term negative for industry sentiment and business conditions since the higher duty will push up domestic gold prices.
The brokerage pointed out that gold prices experienced an about 80% inflation in 2025 and have been stable over the last two months, having corrected roughly 5% from their peak. Morgan Stanley expects some dampening of demand following the tariff increase, but notes offsetting factors including the sharp year-on-year inflation in gold prices and the inauspicious adhik mass period from May 17 to June 15 during the first quarter of 2027.
Titan Company (NSE: TITAN) experienced a swift market reaction to the government announcement, with shares plunging in early trading on May 13 and 14 before recovering some ground later. Morgan Stanley views any share-price correction stemming from the duty increase and the associated demand impact as a potentially attractive entry for investors with a long-term horizon.
Analysts highlighted Titan’s evolution from a watchmaker into a leading branded jewellery retailer, with its gold business anchored by the Tanishq brand. The firm said Titan’s gold segment remains the main growth driver, supported by premiumisation trends, wedding-related demand, gold exchange schemes and rising consumer confidence in organised jewellery retail.
Crucially, Morgan Stanley noted Titan’s sourcing structure: the company sources more than 50% of its gold from customer purchases via exchange, while the remainder is obtained through a mix of metal gold loans and market purchases. That sourcing mix provides some insulation against the immediate impact of a higher import duty, the analysts said.
In its Q2 business update, Titan linked elevated gold prices to larger average transaction values, even as buyer volumes showed a slight softening. The update indicated that customers are adapting to higher prices by opting for lighter and lower-carat pieces. Titan’s CaratLane brand is expanding rapidly to serve younger consumers who have shown a preference for lower-carat jewellery, and the company is pursuing an aggressive store expansion strategy to grow organised retail market share.
The note also referenced a valuation tool question for investors - asking whether TITN is a bargain - and described a Fair Value calculator that uses a combination of 17 industry valuation models to assess stocks, suggesting investors can use such tools to evaluate potential opportunities.
What this means
- Short-term: Higher duties will raise domestic gold prices, creating immediate sentiment and business pressure for jewellery retailers focused on investment purchases.
- Medium-long-term: Titan’s sourcing model and branded, organised retail footprint are seen by Morgan Stanley as structural advantages that should limit the lasting impact.
- Consumer behaviour: Evidence of customers shifting to lighter and lower-carat jewellery as a response to higher gold prices.