Govt raises import duty on gold to conserve forex

The Union Government on Wednesday raised import duties on precious metals as part of a broader effort to conserve foreign exchange amid mounting pressure from the West Asia crisis. Effective May 13, import duty on gold and silver has been increased from 6 per cent to 15 per cent and that on platinum has been raised from 6.4 per cent to 15.4 per cent.

“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.

The Government has hiked Surcharge (SWS) and the Agriculture Infrastructure and Development cess (AIDC) to push the customs duty.

Consequential changes have also been made to other items such as gold/silver dore, coins, findings.

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.

Industry experts say the decision will lead to a sharp decline in sales of gold jewellery and coins, but will spur old gold exchange within the economy.

Another sources said the ongoing war in West Asia is expected to balloon India’s import bill, and the government wants to prioritise forex expenditure towards essential imports like crude oil, fertilisers, industrial raw materials and capital goods that directly support economic activity and food security.

A notification issued by the finance ministry shows the Government increased the Social Welfare.

The impact of the duty hike would be visible in the retail inflation data of May, and a full picture would be visible only in June. As international prices of gold remain elevated, the duty hike is not likely to have much of an impact on the Current Account Deficit (CAD), as even lower imports would come in at a costlier price. Besides, the rupee is likely to remain under pressure, as is evident from the currency touching a record low of 95.80 to a dollar. Historically, import duty hikes have resulted in lower volumes of imports, but elevated global prices have kept the import bill high.

Gold imports in India, the world’s second biggest gold consumer after China, are driven by the jewellery industry demand. Such imports involve substantial outflow of foreign exchange.

India’s gold imports surged more than 24 per cent to an all-time high of $71.98 billion in 2025-26. In volume terms, however, the shipments dipped 4.76 per cent to 721.03 tonnes in 2025-26. The prices of gold have risen from $76,617.48/KG in FY25 to $99,825.38/KG in FY26.

In the national capital, the price of gold increased by Rs 1,500, or nearly 1 per cent, to Rs 1,56,800 per 10 grams on Tuesday from Monday’s closing level of Rs 1,55,300 per 10 grams. Silver prices also advanced by Rs 12,000, or 4.53 per cent, to Rs 2,77,000 per kg. In the international market, spot gold slipped $42.33, or 1 per cent, to $4,692.64 per ounce while silver fell 3.04 per cent to $83.49 per ounce.

Jewellers and industry leaders on Wednesday said the hike in import duty on gold and silver could impact jewellery volumes in the short term, though demand is expected to remain resilient due to the yellow metal’s enduring cultural and investment appeal in India. India had allowed imports of gold from Dubai at tariffs one percentage point below the normal Most-Favoured-Nation (MFN) rate through a Tariff Rate Quota (TRQ) system.

The quota began at 120 tonnes annually in 2022 and is set to rise to 200 tonnes by 2027, nearly one-fourth of India’s yearly gold imports.