India Raises Gold and Silver Import Duty to 15%, Imports Begin to Fall
India has lifted the import duty on gold and silver to 15%, reversing 2024 cuts, to curb its trade deficit and support the rupee. Government sources say bullion imports have already begun to fall, though the World Gold Council warns official volumes are historically resilient and smuggling tends to rise.
India Raises Gold and Silver Import Duty to 15%
India has increased the import duty on gold and silver to 15%, reversing the tariff cuts introduced in 2024, as New Delhi moves to narrow its trade deficit and support a weakening rupee. According to TheWire.in, citing Livemint, the Union Finance Ministry notified the changes on Tuesday, 12 May, with the revised rates taking effect on Wednesday, 13 May.
Under the new structure reported by TheWire.in, the basic customs duty on several categories of gold and silver imports rose to 10% from 5%, while the Agriculture Infrastructure and Development Cess (AIDC) of 5% remains in place, taking the total effective tax to 15%. FXStreet described the move as a hike from 6% to 15%.
Wider Tariff Changes
The Finance Ministry also revised duties on related products. Gold and silver findings now carry a 5% customs duty and platinum findings 5.4%, according to TheWire.in. Imports of spent catalysts or ash containing precious metals face a concessional 4.35% duty, subject to compliance and recycling clearances.
The decision comes as India faces pressure on its current account deficit from rising crude oil prices and increased bullion imports. India is the world's second-largest consumer of gold and the largest importer of silver, with almost its entire domestic demand met from overseas supply.
Prices and Early Import Response
Domestic gold prices rose immediately, but by less than the size of the duty increase. FXStreet reported spot prices climbed between 4% and 6%, short of the roughly 9 percentage-point hike. The World Gold Council attributed the muted pass-through to seasonally weak demand, ample supply from the exchange of old jewellery, and the likely front-loading of imports at lower rates. Dealers also offloaded inventory bought at the old duty, creating local price discounts.
Government sources cited by NDTV Profit said gold imports have begun to fall following the duty hike.
Historical Pattern and Smuggling Risk
World Gold Council analysis suggests the effect on official volumes may be limited. Over the past 13 years, the correlation between duty rates and official imports stood at -0.17, a weak relationship. Across duty regimes from 6% to 15%, official imports remained between 175 tonnes and 236 tonnes per quarter in most periods, excluding the COVID period in 2020.
The Council warned that higher duties tend to boost unofficial flows. Between 2013 and 2026, duty increases were mostly followed by more smuggled gold, while reductions coincided with sharp declines. After a 4% duty rise in 2013, unofficial imports jumped from 10 tonnes in one quarter to 70 tonnes a year later, and smuggling averaged 34 tonnes a quarter until 2019.
Analyst Ross Norman noted a bullish reading of the policy, saying the severity of conditions that pushed the government to tax gold reinforces the case for owning it. If India follows historical trends, the higher tax is likely to become background noise after a short-term adjustment.