India raised the import duty on gold and silver bullion from six percent to 15 percent on May 13, 2026 [1].
The move aims to protect the national currency and reduce the trade deficit by curbing the overseas purchase of precious metals. Because India is one of the world's largest consumers of gold, such a sharp tax increase directly impacts domestic prices and foreign-exchange reserves.
Finance Minister Nirmala Sitharaman said the increase in duty will help curb overseas purchases and protect foreign-exchange reserves [3]. Prime Minister Narendra Modi said a pause on gold purchases is needed to protect the rupee [2].
The policy change triggered immediate volatility on the Multi Commodity Exchange. Gold premiums surged past $100 per ounce for the first time in more than a decade [4], while silver premiums reached a record high [4].
Government officials said the hike is necessary to address smuggling concerns and ease pressure on the trade deficit [1], [5]. However, industry leaders warn of a cooling market. Surendra Mehta, National Secretary of the Indian Bullion and Jewellers Association (IBJA), said overall demand is expected to drop by almost 10 percent [5].
Mehta said the jewellery business alone could potentially see a five to seven percent decline in demand [5]. The sudden shift in cost is expected to dampen consumer appetite for luxury goods and investment-grade bullion in the short term.
“"We must pause gold purchases to protect the rupee,"”
This aggressive fiscal measure signals the Indian government's priority of macroeconomic stability over the interests of the domestic jewellery and bullion sectors. By raising the cost of legal imports, the government seeks to stabilize the rupee and preserve foreign-exchange reserves, though it risks incentivizing the illicit smuggling of gold to bypass the 15% tariff.
