The Indian government on Wednesday increased the effective import duty on gold and silver to 15% from 6% in a major move aimed at curbing precious metal imports and protecting India’s foreign exchange (forex) reserves, amid the ongoing West Asia crisis.
The Union ministry of finance, through a notification effective 13 May 2026, raised the basic customs duty and revised the agriculture infrastructure and development cess (AIDC) and social welfare surcharge (SWS) structure on precious metals.
Under the revised structure, the government has imposed 10% basic customs duty and 5% AIDC on gold and silver imports, taking the total effective levy to 15%. Import duty on platinum has also been increased to 15.4% from 6.4%.
The notification further stated that gold and silver findings would attract 5% duty, while platinum findings would face 5.4% duty. Precious metal spent catalysts would attract 4.35% duty, subject to compliance conditions.
The move comes days after prime minister (PM) Narendra Modi urged citizens to avoid purchasing gold for a year in the national interest to help conserve forex reserves, amid rising economic pressures linked to the West Asia conflict.
According to media reports, the increase in customs duties is part of a broader strategy to conserve foreign exchange, protect the current account deficit (CAD), prioritise essential imports and strengthen macroeconomic stability amid heightened global uncertainty.
India, as a major crude oil importer, remains vulnerable to rising global energy prices and supply disruptions stemming from tensions in West Asia. Higher oil prices and shipping disruptions could increase the country’s import bill, pressure inflation and widen the CAD.
The government says India’s forex resources need to be prioritised towards essential imports such as crude oil, fertilisers, industrial raw materials, defence equipment, capital goods and critical technologies.
Precious metals, while culturally and financially significant, are predominantly consumption and investment-driven in nature and involve substantial foreign exchange outflows.
The sharp increase in tariffs is expected to raise domestic bullion prices further and dampen demand in the world’s second-largest consumer of gold after China. Economists believe the move could help narrow the trade deficit and support the rupee, which recently touched a record low of 95.63 against the US dollar.
According to data cited by the Global Trade Research Initiative (GTRI), India’s gold bar imports rose from US$36.5bn (billion) in 2022 to US$58.9bn in 2025, with imports from the UAE accounting for an increasing share.
The think tank backed the prime minister’s appeal to reduce gold purchases and urged the government to review tariff concessions provided under the India-UAE free trade agreement, saying they had contributed significantly to the recent surge in bullion imports.
India’s gold imports surged more than 24% to an all-time high of US$71.98bn in FY25-26, although import volumes dipped 4.76% to 721.03 tonnes due to soaring prices.
The duty hike also comes at a time when inflation in precious metal jewellery has remained elevated. Government data released on Tuesday showed inflation in silver jewellery stood at 144.34% in April, while inflation in gold, diamond and platinum jewellery was recorded at 40.72%.
Industry participants warned that higher duties could weaken jewellery demand and potentially revive gold smuggling which had declined after India reduced import duties in the FY24-25 Budget.
“As expected, the government has raised duties to curb the current account deficit. However, this could affect demand, as gold and silver prices were already elevated,” Surendra Mehta, national secretary of the India Bullion and Jewellers Association, says.
Shares of jewellery companies came under pressure following the announcement. Titan Company traded flat with a negative bias, while Kalyan Jewellers fell nearly 5%. Shares of Senco Gold and PC Jeweller also remained under pressure during Wednesday’s trade.
Meanwhile,
Reuters reported that Indian banks had resumed imports of gold and silver after a gap of more than a month by agreeing to pay a 3% integrated goods and services tax (IGST) levy that had earlier prompted lenders to halt shipments.
Banks, which account for most of India’s refined gold imports, had stopped imports from April 1 after customs authorities began demanding IGST payments. According to Reuters, banks have already cleared about 9 metric tonnes of gold and 34 metric tonnes of silver imports in May after paying the levy.
According to bullion dealers, demand remained weak despite improved supply, with gold trading at discounts of up to US$17 an ounce over official domestic prices. India’s gold imports in April were estimated at around 15 metric tonnes, one of the lowest monthly levels in nearly three decades.
Chief economic adviser V Anantha Nageswaran had earlier described the West Asia crisis as a 'live balance of payments stress test' with implications for inflation, the exchange rate and the current account balance.
