Gold, Silver Import Duty Raised to 15% From 6% to Curb Imports and Support Rupee

The Indian government has sharply increased import duties on gold and silver to 15% from 6% in a major move aimed at reducing precious metal imports, protecting foreign exchange reserves, and supporting the weakening rupee amid rising global uncertainties.

According to government notifications issued on Wednesday, the revised structure includes a 10% basic customs duty along with a 5% Agriculture Infrastructure and Development Cess (AIDC), taking the effective import tax on gold and silver imports to 15%.

The move comes at a time when India is facing mounting pressure on its external finances due to elevated crude oil prices, Middle East tensions, and rising bullion imports. India is the world’s second-largest consumer of precious metals and meets almost all of its gold demand through imports.

Prime Minister Narendra Modi had earlier appealed to citizens to avoid non-essential gold purchases, including wedding-related buying, for one year in the national interest. The appeal was linked to concerns over rising imports hurting India’s trade balance and draining foreign exchange reserves.

Backing the Prime Minister’s remarks, the Global Trade Research Initiative (GTRI) stated that rising bullion imports were creating severe pressure on India’s external finances. According to GTRI data, India’s gold bar imports surged from $36.5 billion in 2022 to $58.9 billion in 2025. Imports from the UAE also rose significantly during this period.

GTRI further urged the government to review tariff concessions provided under the India-UAE Free Trade Agreement, saying the duty benefits offered to Dubai had contributed to the sharp rise in precious metal imports into India.

Union Minister Ashwini Vaishnaw also supported the government’s appeal during the CII Annual Business Summit 2026 in New Delhi. He urged citizens to cut down on import-related spending to conserve foreign exchange reserves, especially as instability in the Middle East continues to disrupt global trade and energy flows through the Strait of Hormuz.

Economists believe the higher duties could help narrow India’s current account deficit and provide support to the rupee, which has been among Asia’s weakest-performing currencies in recent months. However, the move is also expected to dampen domestic demand for gold and silver as prices were already trading at elevated levels before the tariff hike.

Surendra Mehta, National Secretary at the India Bullion and Jewellers Association, said the increase in duties was aimed at controlling the current account deficit but warned that it could hurt demand as precious metal prices remain high.

Gold demand in India has risen sharply over the past year, especially for investment purposes, as investors shifted away from equities following weak market returns. Inflows into India’s gold exchange-traded funds (ETFs) jumped 186% year-on-year during the March quarter to a record 20 metric tonnes, according to the World Gold Council.

The government had already started tightening gold imports in recent weeks by imposing a 3% integrated goods and services tax (IGST) on gold and silver imports. Following this step, banks temporarily halted imports for more than a month.

As a result, India’s gold imports in April dropped to near 30-year lows. Imports had resumed after banks started paying the 3% IGST, but bullion dealers now expect imports to decline again after the latest duty hike.

Industry participants also warned that the sharp rise in duties could revive illegal gold smuggling activities, which had reduced after India lowered tariffs in mid-2024.

Bullion dealers said the widening price gap between domestic and international markets could once again make smuggling profitable. A Mumbai-based bullion dealer at a private bank stated that grey markets are likely to become active again because smugglers can earn significant profits at current gold price levels.

The latest increase in import duties marks one of the government’s strongest attempts in recent years to control non-essential imports and stabilise India’s external financial position amid growing geopolitical and economic uncertainties.

Jewellery Stocks Crash After PM Modi’s Appeal to Delay Gold Purchases

Jewellery stocks witnessed sharp selling pressure on May 11 after Prime Minister Narendra Modi urged citizens to postpone gold purchases for one year amid rising economic pressure linked to the West Asia crisis.

The statement triggered heavy profit booking across listed jewellery companies despite strong March quarter earnings and positive brokerage commentary.

Titan Emerges Top Nifty Loser

Shares of Titan Company fell 7% during early trade, making it the top loser on the Nifty index. The decline came just a session after the stock touched its all-time high following robust Q4FY26 results.

Titan had reported its highest revenue growth in 15 quarters, driven by strong traction in the jewellery business. However, investor sentiment weakened sharply after concerns emerged over possible near-term demand slowdown in gold purchases.

Midcap Jewellery Stocks Sink Up to 12%

The selloff was even steeper across midcap and smallcap jewellery counters.

Shares of Sky Gold and Diamonds plunged 12.24%, while Senco Gold dropped 11%.

Kalyan Jewellers tumbled 9.99% despite reporting more than 100% growth in consolidated net profit for the March quarter.

Thangamayil Jewellery declined 9.79%, while Tribhovandas Bhimji Zaveri slipped 6.83%.

Shares of PC Jeweller also fell 5.67% during the session.