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India has increased import tariffs on gold and silver to 15% from 6% to reduce imports, control the trade deficit, and support the rupee. The revised structure includes a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess (AIDC). Higher duties are expected to dampen demand in the world’s second-largest precious metals market, especially amid already elevated prices. Industry participants warned that increased tariffs could revive smuggling activities. The move follows rising investment demand for bullion and record inflows into gold ETFs, while recent measures had already pushed April gold imports to a near 30-year low.

*Key Highlights*

• India increases gold and silver import duty to 15% from 6%.
• Move aims to curb imports and reduce pressure on forex reserves.
• Higher tariffs may weaken bullion demand amid elevated prices.
• Industry warns increased duties could encourage smuggling activity.

Gold and silver prices in the domestic market are expected to remain firm after India sharply increased import duties on precious metals to 15% from 6%. The government introduced a 10% basic customs duty along with a 5% Agriculture Infrastructure and Development Cess (AIDC) to discourage excessive imports and support the rupee amid rising pressure on foreign exchange reserves.

Supporting the bullish outlook for domestic bullion prices, India heavily depends on imports to meet its gold demand. Higher tariffs will increase landed costs for importers and jewellers, potentially tightening near-term availability in the local market. The decision also comes at a time when gold investment demand has strengthened significantly due to elevated global prices and weak returns from equities. According to industry data, inflows into gold exchange-traded funds (ETFs) surged sharply during the March quarter, reflecting strong investor preference toward safe-haven assets.

The government’s recent measures to reduce bullion imports had already impacted demand. Earlier, authorities imposed a 3% integrated GST (IGST) on imports, causing banks to temporarily halt shipments and pushing April gold imports to a near 30-year low. With the latest tariff hike, imports are expected to slow further in the coming months.

However, industry participants cautioned that higher import duties could revive unofficial trade channels and smuggling activities, which had declined after tariff reductions in 2024. Market participants will now closely monitor demand trends during the festive and wedding seasons.

Overall, higher import duties may support domestic bullion prices while curbing imports, though weaker demand and rising smuggling risks could create challenges for the organized market.

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