New Delhi, May 13, 2026
In a significant policy reversal, the Indian government has sharply raised import duties on gold and silver, bringing them back to levels last seen before the landmark Budget 2024 cuts. The move, driven by a deepening foreign exchange crisis triggered by the ongoing West Asia conflict, is set to have wide-ranging consequences for consumers, jewellers, and investors across the country.
The Hike: What Changed
The government on Wednesday, May 13, hiked import duties on gold and silver to 15 per cent from 6 per cent as part of measures to curb inbound shipments of precious metals amid a rising import bill due to the West Asia crisis. The Finance Ministry, in a notification, hiked the Social Welfare Surcharge (SWS) and the Agriculture Infrastructure and Development Cess (AIDC), effective May 13, raising the overall customs duty on gold to 15 per cent. Siasat Daily
The announcement came just days after Prime Minister Narendra Modi called for a judicious use of fuel, postponement of gold purchases and foreign travel, among other measures, to conserve foreign exchange amid the West Asia crisis. Siasat Daily
The Crisis Behind the Move
The duty hike did not happen in isolation. India is facing severe pressure on its balance of payments. Chief Economic Advisor V Anantha Nageswaran described the ongoing West Asia crisis as a “live balance of payments stress test”, with direct consequences for inflation, the current account, and the exchange rate. The Indian rupee hit a record low of 95.63 against the US dollar. Siasat Daily
Adding to the strain, India is already battling a high import bill from oil and fertiliser due to the US-Iran war, which has been ongoing for the last 10 weeks, leading to the effective closure of the Strait of Hormuz. India imports 60 per cent of its LPG usage, and of that, 90 per cent flows through the now-closed Strait of Hormuz. Siasat Daily
Against this backdrop, precious metals imports became an obvious target for curbing foreign exchange outflows.
Soaring Gold Imports — The Numbers Tell the Story
The urgency of the government’s action becomes clear when you look at the import data. India’s gold imports surged more than 24 per cent to an all-time high of USD 71.98 billion in 2025-26. In volume terms, however, the shipments dipped 4.76 per cent to 721.03 tonnes, reflecting sharply higher prices rather than greater physical demand. The price of gold rose from USD 76,617.48/KG in FY25 to USD 99,825.38/KG in FY26. Siasat Daily
Domestically, the impact was already being felt before the duty hike was announced. 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, while silver prices advanced by Rs 12,000, or 4.53 per cent, to Rs 2,77,000 per kg. Siasat Daily
A Policy That Has Gone Full Circle
This latest hike is a striking reversal of policy compared to just two years ago. During Budget 2024, Finance Minister Nirmala Sitharaman trimmed customs duty on gold and silver bars by a massive 60% — down to 6% from the earlier 15%. That cut was celebrated by the bullion industry and consumers alike, and proved highly effective in stimulating demand and formalising imports. Goodreturns
India retained the effective gold import duty at 6% in the Union Budget presented on 1 February 2025, a decision influenced by the positive outcomes of the earlier duty cut, which had boosted official bullion imports and reduced the incentive for smuggling. Poonawalla Fincorp
But this is not the first time India has reversed course. India had, in 2022, raised gold import tax to 15 per cent to check the capital account deficit amid a falling rupee due to the Russia-Ukraine war. History, it appears, is repeating itself. Siasat Daily
A broader look at the policy journey over recent years shows how reactive India’s precious metals duty regime has been. Budget 2021 sharply reduced customs duty on gold and silver from 12.5% to 7.5% to curb smuggling, while introducing the Agriculture Infrastructure and Development Cess. Budget 2023 increased import duty on silver to align it with gold. Budget 2024 reduced customs duty again to 6%, and Budget 2025 left duties unchanged. Spider Software
What This Means for Consumers and the Industry
The immediate consequence will be felt in the pocket. Higher import duties translate directly into higher domestic prices for gold and silver — for wedding shoppers, retail investors, and the jewellery industry alike. India is the world’s second-biggest gold consumer after China, and its imports are largely driven by the jewellery industry. Siasat Daily
Industry stakeholders had, in the lead-up to Budget 2025, actually been pushing in the opposite direction. The bullion industry had anticipated further revisions in import duties, with stakeholders lobbying for a reduction from 6% to 3%. Such a cut was expected to align Indian gold prices more closely with global benchmarks, reducing the incentive for illegal imports through Free Trade Agreement routes and Least Developed Countries. Goodreturns
Now, with the duty reverting to 15%, the incentive for smuggling through informal channels is likely to resurface — a problem that the 2024 duty cut had meaningfully addressed.
The Bigger Picture
India’s yo-yo policy on gold import duties reflects a fundamental tension: the country’s deep cultural and economic affinity for gold and silver on one hand, and the pressure these imports place on foreign exchange reserves and the current account deficit on the other.
Since India imports most of its gold and silver, any change in import taxes directly affects domestic prices, jewellery demand, and even smuggling. The current hike is a pragmatic, if painful, response to an extraordinary crisis — but it also risks undoing some of the structural gains in formalising the bullion trade that the 2024 reforms had achieved. Spider Software
For now, consumers are advised to brace for significantly higher prices on gold and silver purchases, while the industry watches closely for any further government notifications or relief measures in the weeks ahead.
