New Delhi, May 13: The Central government on Wednesday hiked import duties on gold and silver in a bid to curb non-essential imports amid the ongoing West Asia crisis, which has put pressure on the country’s foreign exchange reserves.
Effective May 13, the import duty on gold and silver has been increased from 6% to 15%, while the duty on platinum has been raised from 6.4% to 15.4%.
Government sources described the duty hike as a “preventive measure” amid “extraordinary external conditions” and said it reflected prudent economic governance.
“Rather than resorting to quantitative restrictions or more severe import-management tools, the approach relies on moderate price-based disincentives that preserve market flexibility and consumer choice,” a source said.
India, the world’s second-largest consumer of gold after China, imports significant quantities of the precious metal to meet demand from the jewellery industry, leading to substantial foreign exchange outflows.
“During periods of external stress, measured moderation of discretionary imports may contribute significantly to overall macroeconomic stability and prudent external-sector management,” another source said while explaining the rationale behind the duty hike.
All India Gems and Jewellery Domestic Council Chairman Rajesh Rokde said the increase in import duty would raise gold prices by around Rs 27,000 per 10 grams, compared to the earlier impact of around Rs 13,500 per 10 grams.
“What the industry fears is that this will give rise to the grey market. Smuggling is likely to grow, setting up a parallel economy in the country,” Rokde said.
Senco Gold & Diamonds Managing Director and CEO Suvankar Sen said he expects the elevated import duty to remain in place until the West Asia crisis subsides.
“So maybe for around one year it shall stay at these levels. The volumes might get impacted by 10-15%, but value-wise it will remain at a higher level. Consumers will buy lighter-weight jewellery,” he said.
India’s gold imports surged more than 24 per cent to an all-time high of USD 71.98 billion in 2025-26. However, in volume terms, shipments declined 4.76 per cent to 721.03 tonnes during the same period. Gold prices rose from USD 76,617.48 per kg in FY25 to USD 99,825.38 per kg in FY26.
The duty hike comes days after Narendra Modi called for restraint in gold purchases and other austerity measures to reduce avoidable foreign exchange expenditure.
Addressing the nation on Sunday, Modi urged citizens to use fuel judiciously and postpone discretionary spending such as gold purchases and foreign travel in order to conserve foreign exchange amid the West Asia crisis.
PTI