Shares of major Indian jewellery companies, including Titan Company, Kalyan Jewellers, PC Jeweller, and Thangamayil Jewellery, experienced declines following a dual blow from new regulatory changes. Investors reacted to the introduction of a Merchant Discount Rate (MDR) on high-value UPI transactions and a significant increase in gold hallmarking fees, both set to raise operational costs for retailers.
New UPI Transaction Fees Imposed
Effective October 15, a 0.4% Merchant Discount Rate (MDR) will be levied on Person-to-Merchant (P2M) UPI transactions exceeding Rs 2,000. For transactions of Rs 75,000 or more, a maximum charge of Rs 300 will apply. This move is particularly impactful for the gold jewellery industry, which frequently deals with high-value purchases, making payment processing costs a substantial factor.
S Abdul Nazar, State General Secretary of the Kerala Gold and Silver Merchants Association, highlighted the cumulative burden on retailers. He stated that jewellery businesses already manage various operating expenses, including GST, hallmarking, and banking fees. The new UPI MDR is expected to further strain small and medium-sized enterprises (SMEs) in the sector.
Gold Hallmarking Fees See Significant Hike
Adding to the financial pressure, the Bureau of Indian Standards (BIS) has increased gold hallmarking fees by 67%. The charge per gold article has risen from Rs 45 to Rs 75, with new rates effective from September 14, 2026. A minimum charge of Rs 200 has also been set for gold consignments. This regulatory change directly adds to the cost of doing business for all gold retailers.
Market Reaction and Stock Performance
The combined impact of these two developments led to a downturn in several prominent jewellery stocks. On September 17, PC Jeweller shares closed 2.37% lower, while Titan Company saw a 1.14% drop. Thangamayil Jewellery also declined by 2.37%. Kalyan Jewellers shares ended the session on a flat note.
While most major players felt the negative sentiment, some stocks managed to buck the trend. Goldiam International shares rose 1.20%, and Senco Gold increased by 3.43% in the same trading session, though some had experienced early dips.
"Jewellery retailers are already dealing with a range of operating and compliance-related costs, including GST, hallmarking and HUID charges, banking fees, security expenses and employee costs. Introducing MDR on UPI transactions could further increase the cost burden, with small and medium-sized jewellery businesses likely to feel the impact more acutely." — S Abdul Nazar, State General Secretary, Kerala Gold and Silver Merchants Association.
The new regulations pose a significant challenge for the Indian jewellery sector, potentially leading to higher prices for consumers or reduced profit margins for retailers as they absorb these increased operational expenses.