India has no plans to raise import duty on Gold and Silver

A day after Prime Minister Narendra Modi urged the citizens to avoid purchasing gold for a year to reduce economic impact of the ongoing West Asia conflict, a government source, on Monday, told an international news agency that India has no plans to raise import duties on gold and silver.

The clarification came amid growing concerns over foreign exchange outflows due to rising imports of gold and crude oil, both of which form a major part of India’s import bill.

On Sunday, PM Modi, while addressing a rally in Hyderabad, appealed to the public to cut down on fuel consumption and postpone discretionary spending involving foreign exchange.

“Gold purchases are another area where foreign exchange is used extensively... In the national interest, we must resolve not to purchase gold for a year, no matter how many functions we have scheduled at home,” the prime minister had said.

He also suggested greater use of metro rail services, carpooling, electric vehicles, railway parcel movement and work-from-home arrangements to conserve foreign exchange amid the war tensions.

India is the world’s second-largest consumer of gold and the largest consumer of silver. More than 90 per cent of the country’s annual gold requirement is met through imports, while domestic production remains negligible at around 1–2 tonnes annually.

The country’s gold demand generally ranges between 700 and 800 tonnes every year, with purchases surging during festivals and the wedding season.

According to Commerce Ministry data, India’s gold imports rose 28.73% to $69 billion during April-February 2025-26 due to high prices of the precious metal. Total gold imports for the financial year 2025-26 surged to $72 billion, up 24% from $58 billion in the previous fiscal.

The sharp rise in gold imports contributed significantly to the widening trade deficit, which stood at $310.6 billion during the first 11 months of 2025-26, compared with $261.8 billion in the corresponding period a year earlier.

Meanwhile, India’s foreign exchange reserves dropped by $7.794 billion to $690.693 billion during the week ended May 1, according to Reserve Bank of India data released last week. In the previous reporting week ended April 24, the reserves had declined by $4.82 billion to $698.487 billion.