India Increases Import Duties on Gold and Silver Amid Economic Pressures

In a strategic move to address economic pressures stemming from the West Asia crisis, the Indian government has raised import duties on gold and silver to 15%. This decision aims to curb non-essential imports and protect foreign exchange reserves. Industry leaders express concerns about potential increases in smuggling and the grey market. The hike is expected to significantly impact gold prices, with estimates suggesting an increase of around Rs 27,000 per 10 grams. Prime Minister Modi has also urged citizens to exercise restraint in discretionary spending to further conserve foreign exchange. This article delves into the implications of these changes on the jewellery market and the broader economy.

By Narendra Chaudhary May 13, 2026, 13:49 IST

Government Takes Action to Curb Imports

A file image of people buying gold jewelleries (Photo: IANS)

New Delhi, May 13: In response to the ongoing crisis in West Asia, the Central government has announced an increase in import duties on gold and silver to mitigate non-essential imports and protect the country's foreign exchange reserves.

Starting May 13, the import duty for gold and silver has been raised from 6% to 15%, while the duty on platinum has increased from 6.4% to 15.4%.

According to government officials, this duty increase is a “preventive measure” taken under “extraordinary external conditions,” showcasing responsible economic management.

One source explained, “Instead of implementing strict import restrictions, this strategy employs moderate price-based disincentives, allowing for market flexibility and consumer choice.”

As the second-largest gold consumer globally, India imports large amounts of gold to satisfy the jewellery sector's demand, which leads to significant foreign exchange outflows.

Another official noted that during challenging external circumstances, a careful reduction in discretionary imports can greatly enhance macroeconomic stability and effective external sector management.

Rajesh Rokde, Chairman of the All India Gems and Jewellery Domestic Council, indicated that the import duty hike could increase gold prices by approximately Rs 27,000 per 10 grams, compared to the previous impact of around Rs 13,500 per 10 grams.

Rokde expressed concerns that this increase might lead to a rise in the grey market and smuggling, potentially creating a parallel economy.

Suvankar Sen, Managing Director and CEO of Senco Gold & Diamonds, anticipates that the heightened import duties will likely remain until the West Asia crisis is resolved. He predicts a potential 10-15% decrease in volume, although the overall value will stay elevated, leading consumers to opt for lighter jewellery.

India's gold imports reached a record high of USD 71.98 billion in 2025-26, marking a 24% increase. However, in terms of volume, imports fell by 4.76% to 721.03 tonnes during the same timeframe. Gold prices surged from USD 76,617.48 per kg in FY25 to USD 99,825.38 per kg in FY26.

This duty increase follows Prime Minister Narendra Modi's recent call for citizens to exercise restraint in gold purchases and adopt austerity measures to minimize unnecessary foreign exchange spending.

During a national address, Modi urged the public to use fuel wisely and delay discretionary expenditures, such as gold buying and foreign travel, to conserve foreign exchange in light of the West Asia crisis.