India has sharply increased import tariffs on gold, silver and other precious metals to 15 per cent from 6 per cent, in a move aimed at curbing non-essential imports and protecting the country’s foreign exchange reserves amid heightened geopolitical uncertainty and rising global bullion prices.
The revised tariff structure, which took effect from midnight on Wednesday, includes a 10 per cent basic customs duty and a 5 per cent Agriculture Infrastructure and Development Cess (AIDC), according to a notification issued by the Central Board of Indirect Taxes and Customs.
The decision comes against the backdrop of growing concerns within the government over India’s swelling gold import bill and its impact on the external account at a time of elevated oil prices and global uncertainty linked to the war in the Middle East.
Prime Minister Narendra Modi had recently appealed to citizens to defer discretionary gold purchases for at least a year and instead channel savings into productive financial assets and nation-building investments. Officials viewed the appeal as part of a broader effort to reduce pressure on foreign exchange reserves and curb avoidable imports during a period of heightened global volatility.
Officials described the tariff hike as a “carefully calibrated and proportionate intervention” designed to moderate overseas purchases of precious metals while safeguarding macroeconomic stability.
“The government has increased the customs duty on imports of precious metals, including gold, gold dore, silver, silver dore and platinum, as a policy measure aimed at safeguarding macroeconomic stability, conserving foreign exchange, and moderating non-essential imports during a period of heightened global uncertainty arising from the ongoing Middle East crisis,” an official said.
The move comes as India’s gold import bill surged sharply in the last financial year, driven largely by record-high bullion prices. Data from the Ministry of Commerce and Industry showed that gold imports rose 24.1 per cent to $71.97 billion in FY26, compared with $58 billion in the previous year.
Despite the higher import value, the actual volume of gold imports declined to 721.04 tonnes from 757.09 tonnes a year earlier, reflecting the impact of soaring international prices and softer physical demand.
Gold prices have climbed more than 40 per cent over the past year as investors worldwide flocked to safe-haven assets amid geopolitical tensions, central bank buying and concerns over global economic growth. The surge has significantly inflated India’s import bill, widening pressure on the current account deficit and the rupee.
Gold is India’s second-largest import item after crude oil and has long been a major contributor to trade deficits during periods of elevated prices and strong domestic demand.
Analysts said the higher import duty is likely to dampen jewellery demand in the near term and could temporarily slow bullion imports, although it may also widen the premium between domestic and international prices and encourage unofficial inflows.
The government’s latest intervention underscores growing concern over external vulnerabilities as volatile oil prices, regional tensions and a stronger US dollar continue to weigh on emerging market currencies and capital flows.
Market participants said the tariff increase could also encourage recycling of old jewellery and boost demand for financial alternatives such as sovereign gold bonds, exchange-traded funds and digital gold products as consumers seek substitutes for imported physical bullion.
- India
