The move comes amid rising gold demand, record inflows into gold ETFs, and pressure on the rupee. Industry experts warned that the higher tariffs could dampen demand and trigger a revival in gold smuggling, which had eased after tariff cuts in 2024
India has raised import
tariffs on gold and silver to 15% from 6%, government orders
said on Wednesday, as part of efforts to curb overseas purchases
of the metals and ease pressure on the country’s foreign
exchange reserves.
The higher duties could dampen demand in the world’s
second-largest consumer of precious metals, although they may
help narrow India’s trade deficit and support the rupee, one of
Asia’s worst-performing currencies.
However, industry officials warned higher import taxes could
revive smuggling, which had eased after India cut tariffs in
mid-2024.
The government has imposed a 10% basic customs duty and a 5%
Agriculture Infrastructure and Development Cess (AIDC) on gold
and silver imports, taking the effective import tax to 15% from
6%.
“As expected, the government has raised duties to curb the
current account deficit. However, this could affect demand, as
gold and silver prices were already elevated,” said Surendra
Mehta, national secretary at the India Bullion and Jewellers
Association.
Prime Minister Narendra Modi on Sunday urged people to avoid
gold purchases for a year to help protect foreign exchange
reserves. India meets almost all of its gold consumption through
imports.
Gold demand, particularly for investment purposes, has risen
in India amid a recent rally in prices and negative returns from
equities over the past year.
Inflows into India’s gold exchange-traded funds (ETFs)
surged 186% year-on-year in the March quarter to a record 20
metric tons, the World Gold Council said last month.
India has been trying to curb gold imports in recent weeks
and began levying a 3% integrated goods and services tax (IGST)
on gold and silver imports, prompting banks to halt imports for
more than a month.
As a result, April imports fell to a near 30-year low. Banks
have since resumed imports after paying the 3% IGST, but imports
are now likely to fall again following the increase in import
duties, bullion dealers said.
“Grey markets are likely to become active, as the incentives
to bring in gold illegally are high. At current price levels,
smugglers could make significant profits,” said a Mumbai-based
bullion dealer at a private bank, who declined to be named as he
was not authorised to speak to media.
Published on May 13, 2026
