NEW DELHI, May 13: The Government sharply raised import tariffs on gold and silver to 15 per cent from 6 per cent on Wednesday, as it looked to curb non-essential imports and conserve foreign exchange reserves strained by higher oil and fertiliser purchases amid the West Asia conflict.
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The hike follows a rare weekend appeal from Prime Minister Narendra Modi to forgo gold purchases alongside unnecessary foreign travel and conserve oil in order to help the domestic currency.
India is the world’s second-largest consumer of precious metals, which has seen a rally in prices in recent months because of an unabated rise in demand, including for investment purposes. Gold is India’s second-largest commodity import after crude oil, and rising purchases have added to foreign-exchange outflows, pressuring the rupee to record lows.
The higher tariffs are expected to push up domestic prices of gold and silver.
Effective May 13, import duty on gold and silver has been increased to 15 per cent from 6 per cent, and that on platinum has been raised to 15.4 per cent from 6.4 per cent. Consequential changes have also been made to other items such as gold/silver dore, coins, findings, etc.
Gold and silver imports jumped 26.7 per cent year-on-year to USD 102.5 billion in FY2025-26, with their share in total imports rising to 14 per cent from 11.8 per cent in 2024-25.
The duty hike came within days of Prime Minister Narendra Modi’s clarion call for curbs on gold purchases, along with other austerity measures to reduce avoidable foreign exchange expenditure.
Gold imports in India, the world’s second-biggest gold consumer after China, are driven by the jewellery industry demand. Such imports involve a substantial outflow of foreign exchange.
Meanwhile, the rupee touched its lowest-ever closing level of 95.71 against the US dollar on Wednesday.
The rupee hit a record low of 95.75 against the US dollar on Tuesday, but recovered some lost ground on Wednesday after the gold import duty was announced.
“During periods of external stress, measured moderation of discretionary imports may contribute significantly to overall macro-economic stability and prudent external-sector management,” a source said, explaining the rationale behind the duty hike.
Through the duty hikes carried out on Wednesday, basic customs duty on gold has been doubled to 10 per cent, while agriculture infrastructure and development cess (AIDC) has been hiked fivefold from 1 per cent to 5 per cent. This takes the effective import duty on gold and silver to 15 per cent.
Besides, importers have to pay a 3 per cent Integrated GST (IGST), which takes the total duty to 18.45 per cent from 9.18 per cent earlier.
All India Gems and Jewellery Council (GJC) Chairman Rajesh Rokde said the import duty hike will make gold costlier by around Rs 27,000 per 10 grams.
“What the industry fears is that this will give rise to the grey market… smuggling is likely to grow, setting up a parallel economy in the country,” Rokde said. (PTI)
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