India, May 14 -- Jewellers at Zaveri Bazaar are putting up a brave face but the mask is beginning to slip. It's been just three days since the prime minister urged Indians to pause gold purchases for a year, to help shore up slipping forex reserves. But the guillotine fell on Wednesday, when the government raised import tariffs on gold and silver, from 6% to 15%.

"Footfalls have plummeted. Customers are entering stores, checking prices and leaving without making purchases. Many are waiting to see where prices stabilise," said a seasoned bullion trader at Zaveri Bazaar, India's largest gold jewellery market in Bhuleshwar, in South Mumbai.

A senior salesman at a leading showroom said walk-ins have nosedived. Usually, around 50 people walk...