Buying gold in India is more than a tradition—it’s a financial strategy, a cultural practice, and a symbol of prosperity. From weddings to religious festivals, gold has always held a special place in Indian households.
But if you’ve ever traveled across cities, you might have noticed something curious: gold prices aren’t the same everywhere. Why does a gram of gold cost more in one city and less in another?
Let’s break down the top four reasons behind this difference in gold rates across Indian cities:
India is one of the largest importers of gold globally. When gold is brought into the country, it is subject to import duty, and customers pay an additional 3% GST (Goods and Services Tax) when purchasing it.
Although these tax rates are uniform across the country, the way they're applied can differ from city to city. Local compliance, enforcement practices, and administrative variations can cause minor fluctuations in retail gold prices.
Gold usually enters India through major ports like Mumbai, Chennai, and Kolkata. From there, it is distributed to various regions. Naturally, transporting gold to cities farther from these entry points incurs higher logistics and insurance costs.
For example, Mumbai, being a coastal city, sees lower logistics costs, whereas cities in central or northern India may face higher costs, which get added to the final price consumers pay.
The demand for gold isn’t the same everywhere. Southern India, particularly states like Kerala and Tamil Nadu, has a high demand for gold due to cultural and religious practices. This strong demand often creates intense market competition, leading to lower making charges or promotional discounts by jewellers.
In contrast, cities with lower demand might see fewer competitive pricing strategies, which reflects in higher overall costs for buyers.
The Indian government mandates hallmarking to ensure the purity of gold. While this is regulated by the Bureau of Indian Standards (BIS), not every city has easy access to hallmarking centers.
If jewellers need to send gold to another city for certification, this adds extra cost, which is ultimately passed on to the customer. Additionally, premium jewellers may carry out further quality checks, further influencing the price.
The next time you notice a gold price difference between cities, remember: it’s not just about global market rates. The cost is shaped by a complex blend of tax structures, logistics, consumer demand, and quality controls.
Being aware of these factors can help you make informed decisions, whether you're investing in gold or buying it for a special occasion.
