Explained | India's rising gold imports behind PM Modi's appeal for austerity?

New Delhi: As Prime Minister Narendra Modi has appealed for austerity measures in view of the tensions in West Asia, India's rising gold imports are drawing attention.

Emphasising that the Centre is trying to shield people from the adverse impact of the conflict in West Asia, Modi on Sunday called for judicious use of fuel, postponement of gold purchases and foreign travel, among other measures, to strengthen the economy.

Here are a few questions and answers to understand gold imports in India.

Import data

India's gold imports rose over 24 per cent to an all time high of $71.98 billion in 2025-26. It was $58 billion in 2024-25, $45.54 billion in 2023-24, $35 billion in 2022-23, $46.14 billion in 2021-22, $34.62 billion in 2020-21, and $28.2 billion in 2019-20.

In volume terms, however, it dipped 4.76 per cent to 721.03 tonnes in 2025-26 from 757.09 tonnes in 2024-25. It was 795.2 tonnes in 2023-24 and 678.3 tonnes in 2022-23.

India is the world's second-biggest gold consumer after China. The imports are largely driven by the jewellery industry. Traditionally seen as a safe-haven asset during periods of geopolitical uncertainty, gold demand in India tends to surge when global risks rise.

Reasons for jump in imports

According to the commerce ministry, gold import increase is driven by the rise in prices from $76,617.48/KG (FY25) to $99,825.38/KG (FY26). The prices of the precious metal in the national capital is hovering around Rs 1.5 lakh per 10 gms. In April last year, it had crossed Rs 1 lakh for the first time.

Impact of high imports

Higher imports of the precious metal put pressure on the country's trade deficit and foreign exchange outgo.

The rise in imports has pushed the country's trade deficit (difference between imports and exports) to $333.2 billion during 2025-26.

The imports have implications for India's current account deficit (CAD).

India's CAD rose to $13.2 billion, or 1.3 per cent of GDP, in the December quarter from $11.3 billion in the year-ago period, mainly due to a higher trade deficit caused by a decline in exports to the US, according to RBI data released on March 2.

The precious metal accounts for over 9 per cent of the country's total imports. India's imports in 2025-26 was $775 billion.

Source countries

Switzerland is the largest source of gold imports for India, with about 40 per cent share, followed by the UAE (over 16 per cent) and South Africa (about 10 per cent). The total merchandise imports (including gold) from Switzerland rose 11.36 per cent to $24.27 billion during 2025-26.

Steps to curb gold imports

To discourage these imports, the government has imposed import curbs on all forms of articles of gold, silver and platinum. The move was aimed at checking misuse of free trade agreements and curbing imports of these precious metals in the name of unstudded jewellery from countries like Thailand.

Some traders were trying to use the India-Asean FTA to make a quick buck by exploiting duty differentials and circumventing tariffs, according to experts.

Import duty

In 2022, India hiked gold import duty to 15 per cent from 10.75 per cent to check current account deficit and rising import of the yellow metal. In May 2022, 107 tonnes of gold was imported. In the Budget for 2024-25, the duty was reduced to 6 per cent to boost the domestic gems and jewellery industry, curb illegal smuggling, and bring down local prices.

Views of experts

Think tank GTRI urged the government to review its FTA policies, especially tariff concessions on precious metal offered to Dubai under the India-UAE trade deal as it has significantly contributed to the recent surge in gold imports.

The India-UAE Comprehensive Economic Partnership Agreement (CEPA) came into force in May 2022. Under the agreement, India allowed gold imports from the United Arab Emirates at tariffs one percentage point lower than normal import duties through a Tariff Rate Quota (TRQ) system.

The quota started at 120 tonnes annually and will rise to 200 tonnes from 2027, covering nearly 25 per cent of India's gold imports.

"The benefit became even bigger after India cut normal gold import duty from 15 per cent to 6 per cent in the 2024 Budget. As a result, gold imported from Dubai effectively entered India at only 5 per cent duty," GTRI Founder Ajay Srivastava said.

Imports from Dubai have surged since then. India's gold bar imports from the UAE rose from $2.9 billion in 2022 to $6.7 billion in 2023 and further to $16.5 billion in 2025. Dubai's share in India's gold imports increased from 7.9 per cent before the FTA to 28 per cent in 2025, he said.

"The trend raises concerns because the UAE neither mines gold nor carries out major processing activity. Much of the trade appears to involve routing gold from third countries through Dubai simply to benefit from lower Indian tariffs," he added.

It recommended tighter origin rules, a review of precious metal concessions under FTAs, and exclusion of gold, silver, platinum, and diamonds from future trade agreements to protect India's trade balance and foreign exchange reserves.