High gold prices keep India’s rural gold jewellery buyers away; Demand falls 19%

India’s rural gold jewellery market witnessed a sharp slowdown during the first quarter of 2026, with jewellery demand dropping 19% year-on-year, as soaring gold prices and higher import duties pushed ornaments beyond the reach of many rural households.

According to the World Gold Council (WGC), rural India, which contributes nearly 60% of the country`s total gold consumption, recorded jewellery demand of 50 tonnes in Q1 2026, down from 61.5 tonnes during the same period last year.

The decline in rural demand has been driven primarily by a steep rise in the landed cost of imported gold. The Central Government increased the Basic Customs Duty (BCD) from 5% to 10% and the Agriculture Infrastructure and Development Cess (AIDC) from 1% to 5%, taking the effective import duty to 15%. At the same time, the weakening Indian rupee against the US dollar further increased import costs.

As a result, domestic gold prices averaged around ₹1.51 lakh per 10 grams during Q1 2026, representing an 81% increase compared to the previous year. Industry experts say the higher import cost has quickly translated into higher retail jewellery prices, forcing many households to postpone purchases.

Rural consumers have been hit harder than urban buyers because household incomes are largely dependent on agriculture and monsoon conditions. Most families save for several years to purchase jewellery for weddings and other important occasions, making them highly sensitive to price increases. The mandatory PAN card requirement for high-value gold purchases has also discouraged some rural buyers, particularly farmers who do not regularly use tax-related documentation.