The Centre on Wednesday raised the import duty on gold and silver to 15 per cent from 6 per cent, aiming to curb non-essential imports and conserve foreign exchange as the ongoing West Asia crisis pushes up India’s import bill and pressures the rupee.
The Finance Ministry, through a notification issued on May 13, increased the social welfare surcharge (SWS) and the agriculture infrastructure and development cess (AIDC), effectively taking the overall customs duty on gold to 15 per cent.
The move comes days after Prime Minister Narendra Modi urged citizens to postpone gold purchases and adopt austerity measures to help conserve foreign exchange reserves amid escalating geopolitical tensions in West Asia.
Gold imports hit record high
India’s gold imports rose more than 24 per cent to an all-time high of USD 71.98 billion in 2025-26, despite shipment volumes falling 4.76 per cent to 721.03 tonnes during the fiscal.
Gold prices have also surged sharply, rising from USD 76,617.48 per kg in FY25 to USD 99,825.38 per kg in FY26.
In the national capital, gold prices climbed Rs 1,500, or nearly 1 per cent, to Rs 1,56,800 per 10 grams on Tuesday, up from Rs 1,55,300 per 10 grams a day earlier. Silver prices jumped Rs 12,000, or 4.53 per cent, to Rs 2,77,000 per kg.
In the international market, spot gold slipped USD 42.33, or 1 per cent, to USD 4,692.64 per ounce, while silver fell 3.04 per cent to USD 83.49 per ounce.
Move reverses previous duty cut
The government had reduced customs duty on gold to 6 per cent in the 2024-25 Budget to support the domestic gems and jewellery sector, curb smuggling, and reduce local prices.
Earlier, in 2022, India had raised gold import tax to 15 per cent amid concerns over a weakening rupee following the outbreak of the Russia-Ukraine war.
India is the world’s second-largest consumer of gold after China, with imports primarily driven by demand from the jewellery industry.
West Asia crisis adds pressure
Chief Economic Advisor V Anantha Nageswaran on Tuesday warned that the ongoing West Asia crisis is a "live balance of payments stress test", with implications for inflation, the current account, and the exchange rate.
BoP (balance of payment) refers to the difference between foreign exchange inflows and outflows over a specific period.
The Indian rupee hit a record low of 95.63 against the US dollar on Tuesday.
Addressing a rally in Hyderabad on Sunday, Modi called for reduced fuel consumption, increased use of public transport and EVs, carpooling, work-from-home arrangements, and postponement of foreign travel and gold purchases to conserve foreign exchange amid the crisis.
India is also grappling with a higher oil and fertiliser import bill due to the ongoing US-Iran war, which has disrupted trade through the Strait of Hormuz. India imports around 60 per cent of its LPG requirement, and nearly 90 per cent of those supplies pass through the now-closed Strait of Hormuz.
