Gold and Silver Import Duty Increased to 15% in India - Here’s Why
The India government has sharply increased the import duty on gold and silver from 6% to 15% following Prime Minister Narendra Modi’s recent warning on protecting the country’s foreign exchange reserves.
The move is expected to impact gold prices, jewellery demand and bullion imports across India.
Centre Raises Gold and Silver Import Duty to 15%
India meets most of its gold demand through imports. With rising pressure on foreign exchange reserves and increasing trade deficit concerns, the Central government has decided to increase the total import duty on gold and silver.
The revised duty structure now includes:
- 10% Basic Customs Duty
- 5% Agriculture Infrastructure and Development Cess
This takes the total import duty on gold and silver to 15%.
Why Did the Government Increase Import Duty?
The decision was taken mainly to:
- Reduce gold and silver imports
- Protect India’s foreign exchange reserves
- Reduce trade deficit
- Support the weakening Indian Rupee
- Control excessive outflow of foreign currency
Earlier, Prime Minister Narendra Modi had urged citizens to avoid buying gold for one year in order to help conserve foreign exchange reserves.
Impact on Gold Prices in India
The import duty hike is likely to increase domestic gold and silver prices further. Jewellery traders and bullion market experts say the additional tax burden will increase the cost of imported precious metals.
Expected Effects:
- Rise in gold jewellery prices
- Increase in silver prices
- Reduced consumer demand
- Higher wedding season expenses
- Increase in investment gold costs
India Among World’s Largest Gold Consumers
India is the world’s second-largest consumer of gold and silver. Industry experts believe the higher import duty could reduce demand and help narrow the country’s trade deficit.
The move may also provide support to the Indian Rupee, which has been among the weaker-performing Asian currencies in recent months.
Smuggling Concerns Raised by Industry Experts
Bullion industry representatives have warned that increasing import duties may again encourage gold smuggling into India.
Gold smuggling activities had reduced after the government lowered import duties in 2024. However, experts fear the latest duty increase could revive illegal imports.
