India Doubles Gold Tariffs to 15% -- Jewellers Wince, but Gold Loan NBFCs Are the Real Winners

On May 13, India raised import duties on gold and silver to 15%, more than doubling the rate from the 6% level set in last year's Budget. The stated goal: defend the rupee and ease pressure on foreign exchange reserves amid record gold imports. But the ripple effects through Indian equity markets are sharply uneven -- and the biggest beneficiaries are not the names most investors are watching.

The obvious losers: jewellery retailers under pressure

Jewellery companies know exactly how this plays out. Higher tariffs raise the domestic price of gold, which has historically dampened consumer demand, especially for high-value plain gold purchases.

Titan Company (TITAN), the largest listed jeweller with a market cap of Rs 1.86 lakh crore, has been here before. In its Q2 FY26 investor presentation, Titan management noted that "the sharp rise in gold prices and high base effect due to the customs duty reduction impacted buyer growths." When the duty was cut to 6% in Budget 2024, Titan's Tanishq brand saw a revival in footfalls; in Q3 FY25, management acknowledged that despite strong revenue growth, margins faced "dilution because of customs duty and gold rate increase." Kalyan Jewellers (KALYANKJIL) told analysts in its Q3 FY25 earnings call that its 40% consolidated revenue growth was "driven by the import duty cut." The reverse logic applies now -- a duty hike means higher effective prices for customers and lower conversion rates at stores. Manoj Vaibhav Gems N Jewellers (MVGJL), a regional jeweller, warned in its FY25 annual report that "sudden price surges may deter customers from purchasing jewellery, affecting demand and thereby impacting the company's topline performance." The company posted FY25 revenue of Rs 2,384 crore and PAT of Rs 100 crore -- solid numbers that may face pressure in coming quarters.

Even Sky Gold (SKYGOLD), a B2B jewellery manufacturer, flagged the risk. Management noted in its Q1 FY26 earnings call that "gold price volatility, particularly sharp increases from May to mid-June, softened customer movements."

The unexpected winners: gold loan NBFCs

Here is where it gets interesting. While higher gold prices are a headwind for retailers, they are a direct tailwind for gold loan companies. The mechanics are straightforward: when gold prices rise, the same physical gold pledged as collateral is worth more. That means NBFCs can lend more against existing pledges, their loan-to-value (LTV) ratios improve, and their assets under management grow -- all without needing to acquire a single new customer.

Muthoot Finance (MUTHOOTFIN), India's largest gold financing company, is the clearest beneficiary. In its Q3 FY26 earnings call (February 2026), management reported that "standalone AUM has achieved a historic growth of INR 50,000 crores, fuelled by robust 50% year-on-year growth in the gold loan portfolio." For the nine months ended December 2025, Muthoot reported consolidated AUM of Rs 1,64,720 crore (up 48% YoY) and standalone profit after tax of Rs 7,048 crore -- a staggering 91% year-on-year increase. Gold loan AUM alone crossed Rs 1,24,918 crore by H1 FY26, growing 45% YoY. IIFL Finance (IIFL) has seen an even more dramatic transformation. After resuming gold loan operations following its RBI ban, gold loans now constitute 91% of its total AUM at Rs 52,581 crore in FY26 -- up from Rs 21,022 crore in FY25, a roughly 150% jump. The company holds approximately 60 metric tonnes of physical gold as collateral, yielding 18.12% with an average LTV of 63%. When gold prices rise domestically, that 63% LTV drops further, giving IIFL room to lend more. Manappuram Finance (MANAPPURAM) is in a similar position. In Q1 FY26, gold loans accounted for 65% of consolidated AUM, up from 59.5% in Q4 FY25. Management reported consolidated AUM growth of 21.8% year-on-year, adding 3.58 lakh new customers in a single quarter. As the company's Q2 FY25 transcript noted, even with modest operational growth, profitability was "driven primarily by the profitability in gold loans." Fedbank Financial Services (FEDFINA), the gold loan subsidiary of Federal Bank, highlighted a key macro fact in its FY24 annual report: Indian households hold about 24,000 tonnes of gold, with only 5,300 tonnes currently pledged for loans. That means barely 22% of India's household gold stock is monetised -- leaving enormous headroom for gold loan NBFCs as rising prices make pledging more attractive.

The second-order math

The gold tariff hike creates a self-reinforcing cycle for lenders. Higher import duties lead to higher domestic gold prices, which lead to higher collateral values, which lead to more lending capacity and higher interest income. Meanwhile, for jewellers, it is the opposite: higher prices lead to lower footfall, which leads to weaker same-store sales and margin compression.

Capri Global Capital (CGCL), a newer entrant, reported gold loan portfolio yields of 18.9% in Q4 FY24 per its annual report -- among the highest in the NBFC space. As gold prices rise, these yields become even more attractive relative to cost of funds.

What retail investors should do

Do not panic-sell jewellery stocks -- demand pressure from duty hikes tends to moderate within 2-3 quarters as consumers adjust to new price levels. But do watch for margin guidance in the upcoming Q4 results from Titan (reporting May 14) and Kalyan Jewellers.

The more actionable insight is to look at gold loan NBFCs. Muthoot Finance, IIFL Finance, and Manappuram Finance all have structural tailwinds from rising gold prices, and their recent filing data shows this advantage is already compounding. Muthoot's 91% standalone profit growth and IIFL's 150% gold loan AUM surge are not projections -- they are reported numbers from the most recent filings.

The gold tariff hike is a policy decision with a clear set of winners. The market may take a few days to reprice it.

Data sourced from company filings on NSE via Xaro.