The world’s second biggest consumer of gold, India, announced on Friday it is raising import duties on the precious metal to 12.5 percent from 10 percent for the first time since 2013.

The decision is part of the federal budget for the year through March 31, 2020. Gold prices in India hit an all-time high after the announcement. Shares of gems and jewelry companies fell sharply into negative territory on the Bombay Stock Exchange.

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The tax increase may discourage buyers and trim demand in the physical market by ten percent this year, from 760 tons in 2018, according to the All India Gems & Jewellery Domestic Council. The association will request the government to roll back the duty, chairman Anantha Padmanaban told Bloomberg.

“This is very unfortunate and disappointing,” Padmanaban said, adding: “We were expecting a cut in customs duty and this came as a surprise and a shock. This is going to encourage a lot of smuggling.”

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India is the second-largest bullion consumer after China. The country, which imports almost all of its gold, raised the tax on the metal three times in 2013 to control a record current account deficit and stop a decline in the national currency, the rupee.

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