Explained | Why India raised gold import tariff and what this means for you?

The immediate effect of the duty hike is an increase in the retail price of gold jewellery and coins, as the import cost accounts for a major portion of the local price.

The Union government on Wednesday increased import duties on gold and silver to 15 per cent from 6 per cent as part of measures to curb inbound shipments of precious metals amid a rising import bill due to the West Asia crisis.

Days after Prime Minister Narendra Modi's call for curbs on gold purchases for a year, along with other austerity measures to save on foreign exchange, the Finance Ministry hiked the social welfare surcharge (SWS) and the agriculture infrastructure and development cess (AIDC) on gold and silver, effective May 13.

The notification also revised duty rates on jewellery 'findings', small components used in jewellery manufacturing such as hooks, clamps and pins. Gold and silver findings will now attract 5% customs duty, while platinum findings will attract 5.4%.

The government has also modified concessional duty provisions for imports of spent catalysts or ash containing precious metals meant for recovery and recycling. Such imports will now attract a concessional customs duty of 4.35%, subject to compliance conditions. The government has also increased the duty on gold imported from the United Arab Emirates under the fixed-quantity quota system, which earlier enjoyed concessional duty rates.

What does this mean for gold buyers?

The move will make gold imports costlier. The immediate effect of the duty hike is an increase in the final retail price of gold jewellery and coins, as the import cost accounts for a major portion of the local price.

Gold imports in India, the world's second-biggest consumer after China, are largely driven by the jewellery industry. India's gold imports surged more than 24% to an all-time high of $71.98 billion in 2025-26. In volume terms, however, the shipments dipped 4.76 per cent to 721.03 tonnes in 2025-26.

The prices of gold have risen from $76,617.48/kg in FY25 to $99,825.38/kg in FY26.

Challenging times ahead

The gems and jewellery industry is likely to face challenging times ahead following the hike in gold import duty to 15 per cent. There are also fears that this could spur the grey market

"Business is now going to become difficult on the back of the Prime Minister's austerity measures and following the import duty hike in bullion. What the industry fears is that this will give rise to grey market... smuggling is likely to grow, setting up a parallel economy in the country," All India Gems and Jewellery Council chairman Rajesh Rokde was quoted by PTI in a report.

According to Rokde, the increased import duty that includes customs duty, GST and agricultural cess would make gold costlier by around Rs 27,000 per 10 grams.

The government in the 2024-25 Union Budget had cut customs duty on gold to 6 per cent to boost the domestic gems and jewellery industry, curb illegal smuggling, and bring down local prices.

India had, in 2022, raised gold import tax to 15 per cent to check the current account deficit amid a falling rupee due to the Russia-Ukraine war that began in February 2022.

Emphasising that the Centre is trying to shield people from the adverse impact of the conflict in West Asia, Modi on May 10 called for judicious use of fuel, postponement of gold purchases and foreign travel, among other measures, to strengthen the economy.

Gold imports over the years

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% 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.

Gold imports in India 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 price of the precious metal in the national capital is hovering around Rs 1.51 lakh per 10 gm. 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 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. The precious metal accounts for over 9 per cent of the country's total imports. India's imports in 2025-26 was $775 billion.

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

(With PTI inputs)