The Indian government has increased import duties on gold and silver to 15% from the earlier 6%, according to official notifications issued on Wednesday. The move is aimed at curbing rising imports of precious metals and reducing pressure on the country’s foreign exchange reserves.
The revised structure includes a 10% basic customs duty along with a 5% Agriculture Infrastructure and Development Cess (AIDC), significantly increasing the landed cost of bullion imports into India.
The decision comes at a time when India’s import bill has remained under pressure due to elevated global commodity prices and continued demand for gold as a preferred investment asset. India remains heavily dependent on imports to meet domestic gold consumption, making bullion imports a key factor influencing the country’s trade balance.
Rising Investor Interest in Gold Triggers Policy Response
Gold investment demand in India has witnessed strong growth in recent quarters as investors increasingly shifted toward safe-haven assets amid volatility in equity markets and global economic uncertainty.
Data released earlier by the World Gold Council showed a sharp rise in inflows into India’s gold exchange-traded funds (ETFs) during the March quarter, reflecting growing investor participation in bullion-backed financial products.
Prime Minister Narendra Modi had also urged citizens to avoid purchasing gold for one year to help the government conserve foreign exchange reserves, highlighting growing concerns around the economic impact of rising bullion imports.
The government has also been monitoring the impact of rising gold imports on the current account deficit and foreign exchange reserves in recent months. Earlier measures introduced by authorities included the implementation of a 3% Integrated Goods and Services Tax (IGST) on gold and silver imports, which had temporarily affected import activity.
Higher Duties May Impact Domestic Demand
According to bullion market observers and trade reports, the increase in import duties is expected to affect demand across both jewellery and investment categories, particularly as international gold and silver prices continue to remain elevated. Market participants believe the higher import cost could influence consumer buying behavior, especially in price-sensitive markets where gold remains a traditional savings and investment instrument.
As per media reports, India’s gold imports had already declined sharply in April following earlier tax-related measures. Although banks later resumed imports after adjusting to the revised IGST structure, industry estimates suggest import volumes could witness another slowdown after the latest duty increase. The government’s move is part of broader efforts to manage external account pressures, support the rupee and reduce non-essential imports.
Industry Concerns Emerge Over Possible Smuggling Activity
The latest increase in duties has also revived concerns around the possibility of higher gold smuggling activity.
Trade experts warn that a wider gap between domestic and international gold prices could create stronger incentives for unofficial imports through illegal channels. Similar concerns had surfaced during earlier periods when India maintained higher import duties on precious metals before tariff reductions in 2024.
Bullion dealers and market participants believe grey market activity could increase if domestic premiums continue to rise following the revised tax structure. Higher unofficial inflows could also create additional challenges for authorities monitoring the bullion ecosystem.
Precious Metals Continue to Play Key Role in Indian Market
Gold continues to hold significant cultural and financial importance in India, particularly during festive periods, weddings and investment cycles.
At the same time, policymakers remain focused on balancing domestic demand with broader macroeconomic priorities such as trade stability, reserve management and currency support.
The impact of the revised import duties on bullion demand, imports and domestic pricing trends is expected to become clearer over the coming months as traders, investors and consumers adjust to the new structure.
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