India Suddenly 'Targets' Gold and Silver Imports, What's Going On?
The Indian government has officially raised the import tariff on gold and silver to 15% from the previous 6%. This aggressive step is intended to suppress imports of precious metals and maintain the stability of the rupee currency.
The new policy was announced by the government on Wednesday (13/5/2026) local time. The new tariff consists of a basic customs duty of 10% and an Agriculture Infrastructure and Development Cess (AIDC) of 5%.
“As expected, the government has increased the customs duty to curb the current account deficit. However, this could affect demand, as gold and silver prices are already high,” said Surendra Mehta, National Secretary of the India Bullion and Jewellers Association, quoted by Reuters.
The move comes amid concerns over swelling gold imports that burden foreign exchange reserves and widen the country’s trade deficit. India is the world’s second-largest gold consumer after China, and nearly all of its domestic gold needs are met through imports.
The tariff hike is expected to suppress demand for gold and silver in India’s domestic market. On the other hand, the policy is seen as capable of narrowing the current account deficit while supporting the exchange rate of the rupee, which has been one of Asia’s worst-performing currencies this year.
India’s government action also follows Prime Minister Narendra Modi’s earlier request for the public to refrain from buying gold for a year to protect the country’s foreign exchange reserves. Demand for gold in India has surged sharply in recent times, particularly for investment purposes.
The surge was triggered by the global gold price rally and disappointing stock market performance over the past year. The World Gold Council previously reported that inflows into gold ETFs in India surged 186% year-on-year in the March quarter to a record 20 metric tonnes.
Before raising the import tariffs, the Indian government first imposed an integrated goods and services tax (IGST) of 3% on gold and silver imports. That policy once caused banks to halt precious metal imports for more than a month.
As a result of these various tightening policies, India’s gold imports in April plummeted to the lowest level in nearly 30 years. Nevertheless, this new policy raises other concerns, namely the resurgence of gold smuggling practices that had previously subsided after India cut import tariffs in mid-2024.