India increased the customs duty on imported gold and silver from six% to 15% [1].

The move aims to curb gold purchases to protect foreign-exchange reserves and ease pressure on the rupee and the external balance [1, 2].

Prime Minister Narendra Modi addressed the necessity of the measure in May 2024. "I urge people to avoid buying gold for a year to help protect our foreign-exchange reserves," Modi said [1].

The tax hike has created immediate volatility in the domestic market. Gold premiums in India surged past $100 an ounce for the first time in more than a decade [3]. Jewellery stocks fell up to nine% on speculation of higher tariffs [4].

Industry reactions vary regarding the long-term impact on demand. Some reports suggest the hike could slow jewellery demand [2]. However, analysts from Nomura maintain a positive outlook for major branded players like Titan Company Ltd, Kalyan Jewellers, and Senco Gold.

An unnamed Nomura analyst said, "We expect Titan to post about 20% revenue growth and earn roughly Rs 500 crore despite the 15% duty on gold" [5]. This projection suggests that organized jewellers with strong branding may emerge stronger over time despite the increased costs [5].

While some officials previously confirmed no plans to raise duties, the 15% rate took effect in early May 2024 [1, 4]. The shift reflects a strategic effort by the Ministry of Finance to manage the country's macroeconomic stability by limiting the import of non-essential luxury goods.

“"I urge people to avoid buying gold for a year to help protect our foreign-exchange reserves."”

The duty increase highlights the Indian government's priority of currency stability and reserve preservation over the growth of the luxury import market. By making imported gold more expensive, the state hopes to reduce the current account deficit, though it risks fueling a grey market or slowing the formal jewellery sector in the short term.