India imports over 800 tonnes of gold annually—yet it refines less than 10% of it domestically. Why? According to MMTC-PAMP, one of the country’s most trusted precious metal refiners, the answer lies in a glaring policy imbalance that’s been ignored for too long.
With Budget 2026 just around the corner, the company is making a passionate plea: fix the duty structure that unfairly favors imported refined bullion over locally processed gold. Without urgent reforms, they warn, India will remain a passive consumer—not a global player—in the $2 trillion precious metals ecosystem.
Table of Contents
- The Duty Disparity Crisis
- What Is the SEPA Route—and Why Does It Matter?
- MMTC-PAMP’s Three-Point Budget Ask
- Why India Needs a Strong Domestic Refining Industry
- Global Context: How Other Nations Support Refiners
- Conclusion: A Strategic Opportunity for Budget 2026
- Sources
The Duty Disparity Crisis
At the heart of the issue is a simple but devastating mismatch in import duties. When refined gold bullion enters India through certain channels—particularly under the Special Economic Zone (SEZ) or SEPA (Special Economic Processing Area) framework—it faces significantly lower effective duties compared to raw gold imported by domestic refiners.
Domestic refiners like MMTC-PAMP must pay full import duty on doré or scrap gold, refine it to international standards (like LBMA Good Delivery), and then sell it in the domestic market. Meanwhile, foreign-refined bars can enter via SEPA routes with concessional duties, allowing them to undercut local prices—even though they add zero value within India.
“This isn’t just unfair—it’s economically irrational,” says a senior executive at MMTC-PAMP. “We’re investing in world-class infrastructure, skilled jobs, and export potential, yet we’re penalized while imported bullion gets a free pass.”
What Is the SEPA Route—and Why Does It Matter?
The SEPA (Special Economic Processing Area) route allows authorized entities to import refined precious metals with reduced customs duties, ostensibly to support trading and vaulting activities. While well-intentioned, the policy has created a loophole that bypasses domestic refining capacity entirely.
Key concerns include:
- No value addition in India: Gold is simply stored or re-exported without creating jobs or refining expertise.
- Market distortion: Local refiners can’t compete on price, even when their quality matches or exceeds global benchmarks.
- Missed Make in India opportunity: India has the demand, the talent, and the capital—but not the policy support.
This structural flaw undermines the very goals of self-reliance and export-led growth championed by the government.
MMTC-PAMP’s Three-Point Budget Ask
In its pre-Budget 2026 metal sector recommendations, MMTC-PAMP has outlined a clear roadmap for reform:
- Duty Parity: Align import duties on refined bullion (via SEPA) with those on unrefined gold to ensure a level playing field.
- Input Credit Benefits: Allow domestic refiners to claim input tax credits on gold purchases to reduce working capital strain.
- Wider Duty Differential: Introduce a higher duty on imported refined bars versus raw material to incentivize local value addition.
These measures, the company argues, would not only protect domestic industry but also position India as a credible alternative to global refining hubs like Switzerland and the UAE.
Why India Needs a Strong Domestic Refining Industry
Beyond economics, a robust refining sector has strategic implications:
- Transparency & Traceability: Locally refined gold can be fully audited for ethical sourcing—critical in an era of ESG compliance.
- Job Creation: Refineries employ metallurgists, chemists, security experts, and logistics professionals—high-skill, high-wage roles.
- Export Potential: With LBMA accreditation, Indian refiners can supply global markets, earning forex and enhancing brand value.
Currently, India exports almost no refined gold. Yet nations like Turkey and Thailand have built billion-dollar refining export industries in under a decade. India, with its massive jewelry market and diaspora demand, is uniquely positioned to do the same—if given a fair chance.
Global Context: How Other Nations Support Refiners
Compare India’s approach to global leaders:
- Switzerland: Offers streamlined customs, VAT exemptions, and R&D grants for refineries.
- UAE (Dubai): Zero import duty on gold, coupled with free-zone incentives and fast-track certification.
- China: Provides subsidized energy and land to state-backed refiners to dominate Asian supply chains.
As noted by the World Gold Council, “Refining is the backbone of a mature gold market.” India’s current policy, however, treats it as an afterthought.
Conclusion: A Strategic Opportunity for Budget 2026
The Budget 2026 metal sector debate isn’t just about tariffs—it’s about vision. Will India continue to be a price-taker in the global gold trade, or will it seize the chance to become a value-creator?
MMTC-PAMP’s call for duty parity is more than a corporate request; it’s a blueprint for industrial policy that aligns with national interests. By supporting domestic refiners, the government can boost manufacturing, enhance financial transparency, and finally turn India’s gold obsession into a strategic asset.
If Finance Minister Nirmala Sitharaman listens, Budget 2026 could mark the dawn of a new golden age—for Indian refining.