India Raises Gold And Silver Import Duty to 15% to Curb Imports
India raises gold and silver import duty to 15% to curb imports and protect forex reserves.
SociapaHQ
India has increased import tariffs on gold and silver to 15% from 6% as part of efforts to reduce overseas purchases of precious metals and ease pressure on the country’s foreign exchange reserves.
According to government orders issued on Wednesday, the revised structure includes a 10% basic customs duty along with a 5% Agriculture Infrastructure and Development Cess (AIDC), taking the effective import duty on gold and silver imports to 15%.
The move is expected to impact demand in India, the world’s second-largest consumer of precious metals. At the same time, the government is aiming to reduce pressure on the current account deficit and support the rupee, which has remained among Asia’s weaker-performing currencies.
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Higher Duties Trigger Smuggling Concerns:
Industry officials, however, warned that higher duties could revive gold smuggling activity, which had reduced after India lowered tariffs in mid-2024.
According to Reuters, Surendra Mehta said, “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.”
The decision comes days after Prime Minister Narendra Modi urged citizens to avoid purchasing gold for a year in order to help protect India’s foreign exchange reserves. India relies on imports to meet nearly all of its gold consumption demand.
Gold buying in India has remained strong in recent months, particularly for investment purposes, as investors responded to rising gold prices and weaker equity market returns.
According to the World Gold Council, inflows into India’s gold exchange-traded funds (ETFs) rose 186% year-on-year during the March quarter, reaching a record 20 metric tons.
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India had already taken measures in recent weeks to slow gold imports, including imposing a 3% integrated goods and services tax (IGST) on gold and silver imports. The move reportedly led banks to temporarily halt imports for more than a month.
As a result, April gold imports fell to near 30-year lows. While banks later resumed imports after paying the IGST, bullion dealers said the latest duty increase could once again reduce import volumes.
Some industry participants also expressed concerns over the possible return of grey market activity.
A Mumbai-based bullion dealer at a private bank told Reuters that current price levels could create strong incentives for illegal gold imports, adding that smugglers may see opportunities for significant profits under the revised tax structure.
