Govt raises gold, silver tariffs to 15%:Duty increased to curb imports, support rupee

The Government of India has increased the duty on the import of gold and silver from 6% to 15%. This decision was taken in an order issued on Wednesday. The government aims to reduce foreign purchases and ease the pressure on the country’s foreign exchange reserves. This decision could impact the demand for gold and silver in the country. India is the world’s second-largest consumer. However, this could reduce the country’s trade deficit and provide some support to the falling rupee, which fell to an all-time low yesterday, May 12. Its value against the dollar had reached ₹95.50 per USD. The government has imposed a 10% Basic Customs Duty and a 5% Agriculture Infrastructure and Development Cess (AIDC). Thus, the total effective tax has become 15%. Previously, the tariff was reduced to 6% in mid-2024.
Possibility of smuggling increases due to tax hike Industry insiders have warned that the tax hike could lead to an increase in smuggling again. Previously, when duties were reduced, smuggling had decreased. A bullion dealer from a private bank in Mumbai said that good profits can be made from smuggling at current prices. Surendra Mehta, National Secretary of the India Bullion and Jewelers Association, said that the government has taken this step to control the current account deficit. He added that, amidst already high prices, this decision could affect demand. Imports could reach a 30-year low According to a Reuters report, India’s gold imports in April could reach their lowest level in the last three decades. Banks have stopped shipments after a sudden demand for 3% Integrated GST. India is the world’s second-largest gold consumer. In FY 2026, India imported an average of 60 tonnes of gold every month. This incurred an expenditure of about 6 billion dollars, or about 57 thousand crore rupees, every month. The PM said twice, ‘Do not buy gold for a year’ PM Modi also urged citizens to abstain from buying gold for two consecutive days (May 10 and 11) for a year. “There was a time when, in times of crisis, people would donate gold for the nation’s sake. Today, donations are no longer necessary, but in the national interest, we must resolve to refrain from purchasing gold jewelry for a year, regardless of any event at home.” India buys nearly 99% of its gold from abroad. In 2025-26, the gold import bill was approximately ₹6.4 lakh crore. Gold is the second-largest source of gold, accounting for 9% of total foreign purchases. Following Modi’s appeal, shares of Kalyan Jewellers and Senco Gold fell 10% each on May 11th. Shares of Titan, the country’s largest jewelry company, fell 7%. PN Gadgil fell 8%, Thangamayil Jewellery 6%, and other smaller jewelry stocks also fell.