Fashion and Lifestyle

India has officially raised import duties on gold and silver from 6% to 15%. This is one of the biggest duty hikes in recent years and it affects everyone — from people buying jewellery to investors, traders, and the jewellery industry. In this article, we explain exactly what happened, why the government took this step, and what it could mean going forward.

In this article

• What exactly changed in the duty structure

• Three reasons the government did this

• Impact on gold prices and buyers

• Impact on investment and Gold ETFs

• PM Modi's public appeal

• What is happening with imports right now

• The smuggling risk nobody wants to ignore

What exactly changed in the duty structure

Before this decision, anyone importing gold or silver into India paid a 6% import duty. That was already not a small number — but the government has now more than doubled it to 15%. This new rate applies to both gold and silver imports coming into the country.

The 15% is not a single flat tax — it is made up of two separate charges stacked on top of each other:

The Basic Customs Duty is the standard government tax on imports. The Agriculture Cess is an additional charge that goes toward funding rural infrastructure and development projects. Together, they add up to 15% — and this cost does not stay with the importer. It gets passed on through the supply chain and eventually lands on the consumer as higher gold prices in the market.

As of May 13, 2026, the import duty structure officially stands at 15%, made up of 10% Basic Customs Duty (BCD) and 5% Agriculture Infrastructure & Development Cess (AIDC). Earlier, the total 6% duty structure consisted of 5% BCD and 1% AIDC.

At the same time, import duties on platinum were also raised — increasing from 6.4% to 15.4%. This shows the move was not limited to gold and silver alone, but part of a broader precious metals import policy shift.

Three reasons the government did this

This was not a random decision. There are clear economic reasons behind it, and understanding them helps you see the full picture.

📈  India's forex reserves are under serious pressure

India's foreign exchange reserves are the dollars and other currencies the country holds in reserve — think of it as the nation's emergency savings account. Right now, these reserves are being drained by high global crude oil prices, ongoing geopolitical tensions, and strong demand for imported goods. When reserves fall, the rupee gets weaker. Gold imports are one of the biggest reasons dollars leave India, so reducing them makes direct economic sense.

⚖️  India imports almost 100% of its gold needs

Unlike crude oil where India has some domestic production, gold is almost entirely imported. The country produces very little gold on its own. So every kilogram of gold that enters India means more dollars going out of the country. This keeps widening the trade deficit — the gap between what India imports and what it exports. A higher duty makes gold imports more expensive, which should reduce how much is brought in.

₹  To reduce the current account deficit and support the rupee

When fewer dollars leave the country, the pressure on the rupee eases. India's current account deficit — which measures how much more it spends abroad than it earns — is one of the key indicators global investors watch. By bringing this number down, the government hopes to give the rupee more stability in the currency market.

Impact on gold prices and buyers

If you are planning to buy gold — whether it is jewellery for a wedding, coins as a gift, or bars as an investment — the price you pay at the store is going to be higher. Import duties are a cost that moves through the entire supply chain. Importers pay more, wholesalers charge more, retailers adjust their rates, and the final buyer ends up paying the difference.

Gold prices in India were already near record highs before this hike. Adding another 9 percentage points of duty on top of already elevated prices puts physical gold out of reach for many middle-class buyers who typically purchase small quantities during festivals and weddings. The jewellery industry is likely to feel the most immediate impact as footfall in showrooms drops and customers delay purchases.

⚠️  For everyday buyers, this hike means gold jewellery, coins, and bars will cost noticeably more. If you were planning a purchase, it is worth knowing that the price increase is not a market fluctuation — it is a direct result of this policy change.

Impact on investment and Gold ETFs

The picture looks different for investors compared to physical buyers. People who invest in Gold ETFs (Exchange Traded Funds) or Sovereign Gold Bonds are not directly hit the same way, because these products track gold prices without requiring physical import at the retail level.

What is interesting is that even before this duty hike, investment demand for gold had been surging. According to the World Gold Council, inflows into Indian Gold ETFs jumped by a massive 186% year-on-year in the March quarter alone, reaching a record 20 metric tons. This tells us that Indian investors were already heavily moving toward gold as a safe asset.

📊  As physical gold becomes more expensive, more investors are expected to shift toward Gold ETFs and Sovereign Gold Bonds. These products offer gold exposure without the added burden of import duties, making them more attractive in the current environment.

PM Modi's public appeal to citizens

Alongside the duty change, Prime Minister Narendra Modi made a direct public appeal urging Indian citizens to not buy gold for one year. He framed it as a way to help protect India's foreign exchange reserves during a critical economic period.

This was not a government order or a legal restriction — nobody is being stopped from buying gold. It was a personal appeal, asking citizens to be mindful of the country's economic situation. But in India, such appeals from the Prime Minister do carry weight, particularly around culturally important occasions like Dhanteras, Akshaya Tritiya, and wedding seasons when gold buying traditionally peaks.

📢  The combined effect of higher prices and a public appeal from the PM could significantly reduce gold demand over the next few months — which is exactly what the government is hoping for.

What is happening with gold imports right now

Even before the 15% duty kicked in, import restrictions had already started to bite. Earlier this year, a 3% Integrated GST (IGST) was imposed on gold and silver imports. The reaction from the market was swift — banks simply stopped importing gold for over a month because the economics did not work out for them under the new tax.

The result of all this was dramatic. Take a look at what the data shows:

✓April gold imports fell to nearly a 30-year low — one of the sharpest declines in India's modern import history.

✓Banks halted imports for more than a month after the IGST imposition, causing a supply crunch in the domestic bullion market.

✓With the 15% duty now in effect, imports are expected to fall further — possibly hitting new lows in the months ahead.

This data makes it clear that even small policy changes can have an outsized effect on gold import volumes in India. A 9 percentage point duty hike is far from small, which is why analysts expect a significant and sustained drop in official import numbers.

The smuggling risk nobody wants to ignore

Here is the uncomfortable side of this policy that does not always make it into the headlines. Every time the government raises import duties on gold significantly, it creates a wider gap between what gold costs internationally and what it costs inside India. And when that gap gets large enough, it becomes financially attractive for illegal operators to bring gold in through unofficial channels — commonly called grey market smuggling.

Gold smuggling had actually been coming down. After the government reduced tariffs in mid-2024, the incentive to smuggle fell because the legal price and the black market price were closer together. But with duties jumping back up to 15%, that gap opens up again.

Industry experts are now warning that higher duties could revive organised gold smuggling networks. When large quantities of gold enter the country illegally, it undermines the formal bullion trade, deprives the government of customs revenue, and creates serious challenges for regulators trying to track gold flows.

This is the core tension the government has to manage. The duty hike achieves its goal of reducing official imports — but if smuggling fills the gap, the benefit to forex reserves is partially lost, and the harm to legitimate businesses remains very real.

Frequently asked questions

What is the new gold import duty in India in 2026?
The new import duty on gold and silver is 15%, made up of 10% Basic Customs Duty and 5% Agriculture Infrastructure and Development Cess. The earlier rate was 6%.

Why did India increase the gold import duty?
The main reasons are to protect India's forex reserves, reduce the trade deficit, limit dollar outflows from the country, and stabilize the value of the Indian rupee against global currencies.

Will gold prices in India go up because of this?
Yes. The higher import cost will be passed on through the supply chain, meaning retail prices for gold jewellery, coins, and bars will increase in the domestic market.

Are Gold ETFs a better option now?
Gold ETFs are not directly impacted by import duties the same way physical gold is, making them relatively more attractive for investors right now. However, always consult a financial advisor before making investment decisions.

Could this duty hike increase gold smuggling?
Industry experts say yes, there is a real risk. A larger price gap between international and domestic gold prices historically encourages illegal imports. Smuggling had been declining after mid-2024 duty cuts, but could rise again with this hike.

Key takeaway

India's decision to raise gold and silver import duties from 6% to 15% is a calculated short-term move to protect its foreign exchange reserves, reduce the trade deficit, and give the rupee some breathing room. For consumers, it means higher gold prices. For investors, it makes financial gold products like ETFs more attractive. But the government will need to keep a close eye on smuggling risks and the impact on the jewellery and bullion industry — because a policy that looks good on paper can create unintended problems if those risks are not actively managed.