Whalesbook
### The Duty Disparity Dilemma
As the Union Budget 2026 approaches, India's precious metal refining sector is voicing urgent demands for fiscal adjustments that address significant duty disparities. MMTC-PAMP, a prominent player in this sector, is at the forefront of this advocacy, emphasizing how existing trade policies and import duty structures create a competitive disadvantage for domestic refiners compared to imported refined bullion. MMTC-PAMP Managing Director and CEO Samit Guha stated that the current duty gap, particularly evident through the SEPA route for 'Dore' (unrefined metal) versus refined bullion imports, erodes the competitiveness of local operations.
Currently, gold and silver dore imports attract a 6% duty, with refiners receiving only a 0.65% differential, leading to an effective duty rate of 5.35%. This structure places domestic entities at an economic disadvantage. The industry hopes that future trade agreements will continue to exclude gold and silver from concessional duty regimes, mirroring the exclusion of bullion from certain FTAs signed post-SEPA. The government's awareness of this issue has been noted, but concrete action from the upcoming budget is anticipated.
### Boosting India's Refining Prowess
Industry leaders are calling for targeted policy support to bolster India's refining capabilities and increase the number of London Bullion Market Association (LBMA)-accredited refineries. MMTC-PAMP proudly holds the distinction of being India's sole refinery accredited by the LBMA for both gold and silver, showcasing its adherence to global standards. Enhancing this capacity could position India as a significant refining hub. The proposed input-linked incentives, potentially through duty differentials either within existing trade agreements or by widening the current gap, are seen as crucial to encouraging investment in refinery upgrades and expansion. Such measures would enable local refiners to achieve global levels of refining capacity and capability.
### Market Context and Sector Outlook
The precious metal refining sector's plea comes amidst a dynamic market environment. India's precious metal market is projected for robust growth, with revenue expected to reach USD 125,691.8 million by 2030, driven significantly by silver's fast-paced expansion. Silver imports have seen a substantial year-on-year increase, particularly in the April-December 2025 period, indicating strong demand.
Simultaneously, India's gold and silver imports have surged, contributing to a widening trade deficit and placing pressure on the rupee. This surge in imports, coupled with market speculation, has led to record-high gold and silver premiums in India, with gold premiums exceeding $100/oz and silver premiums reaching record levels. These elevated premiums reflect anticipation of potential import duty hikes in the upcoming budget aimed at curbing inflows.
MMTC Ltd, the parent company of MMTC-PAMP, currently holds a market capitalization of approximately ₹9,576 crore. While the company's revenue has faced declines due to strategic operational shifts, it reported a net profit in the recent fiscal year attributed to interest income. The stock has experienced volatility, with recent surges attributed to the broader rally in bullion prices, reflecting investor sentiment towards precious metals. The recent duty reductions on gold and silver in July 2024, from 15% to 6% and 12% to 6% respectively, aimed to curb smuggling and make the metal more accessible. However, refiners are now advocating for further adjustments to their input costs to foster domestic growth and global competitiveness.