India has increased import duties on gold and silver to 15% to reduce overseas purchases and support the national currency [1].
As the world's second-largest gold consumer, India's shift in trade policy affects global bullion markets and the domestic jewelry industry [3, 4]. The government is using these measures to protect foreign-exchange reserves and stabilize a weakening rupee during a period of global instability [1, 4].
The new tariff structure consists of a 10% basic customs duty and a five percent tax [3]. This is a significant increase from the previous import duty of six percent [1].
Beyond the general tariff hike, the government has introduced stricter rules for the jewelry sector. Officials said they have capped duty-free gold imports for jewelry exporters at 100 kilograms per license [2].
These policy changes follow a decline in India's foreign-exchange reserves, which slipped amid the Iran war [5]. By making imports more expensive, the Ministry of Finance said it seeks to curb the outflow of capital and reduce the demand for foreign currency needed to purchase gold [1, 4].
Market analysts said gold demand in India has slowed to a trickle as a result of these tighter trade rules [4]. The move reflects a broader effort by the government to manage the current account deficit by targeting one of the country's most expensive import categories [1, 5].
“India has increased import duties on gold and silver to 15% to reduce overseas purchases.”
The Indian government is prioritizing macroeconomic stability over the growth of its jewelry export sector. By raising tariffs and capping duty-free imports, New Delhi is attempting to mitigate the impact of a depreciating rupee and external shocks from the Iran war. This protectionist approach suggests that the government views the reduction of gold imports as a primary lever to preserve dwindling foreign-exchange reserves.
