India caps duty-free gold imports for jewellers at 100 kilograms
India capped duty-free gold imports for jewellers at 100 kilograms a licence, tightening a key supply channel as imports hit a record $71.98 billion.
India has chosen foreign-exchange stability over flexibility for its jewellery makers, capping duty-free gold imports at 100 kilograms per licence and narrowing a channel that exporters have long used to bring in metal without paying duty. The new rules also tied future licences to completion of at least half of earlier export obligations, while first-time applicants must now undergo physical inspections to prove their factories exist, have capacity and are operating.
The clampdown came alongside a broader tariff shock. India raised import duties on gold and silver to 15% from 6%, effective May 13, lifting the effective tax paid on the metals to 18.4% from 9.2%, according to The Hindu. The combined effect is clear: jewellers will have less room to front-load imports, smaller manufacturers will face tighter scrutiny, and consumers are likely to absorb part of the cost through pricier ornaments and slower discounts.
Officials in New Delhi are trying to curb demand while preserving reserves and supporting the rupee, but the pressure will not be felt evenly. Large exporters with established compliance systems may be able to adapt, though with thinner margins and more paperwork. Smaller workshops, especially those relying on advance authorisation licences to manage cash flow, are the first to get squeezed by physical inspections, fortnightly performance reporting and stricter monitoring introduced by the Directorate General of Foreign Trade. A Kolkata-based bullion dealer said the government appeared determined to bring down gold imports and was increasing barriers one by one.
The macro backdrop explains the urgency. India’s gold imports hit a record $71.98 billion in the 2025/26 fiscal year, even as volume fell 4.76% to 721.03 tonnes, and the country’s trade deficit widened to $333.2 billion. India’s gold jewellery exports, including plain and studded pieces, were worth $11.36 billion in the same fiscal year, while total gems and jewellery exports slipped 3.32% to $27.72 billion, underscoring the sector’s fragility.
The World Gold Council said India’s total gold demand in the first quarter of 2026 rose 10% from a year earlier to 151 tonnes, with investment demand of 82 tonnes outweighing weaker jewellery demand of 66 tonnes. That split highlights the policy dilemma: India needs to restrain imports to protect external balances, yet every new curb risks pushing buyers toward informal channels if official access becomes too restrictive. Customs and revenue intelligence officers are already preparing tighter surveillance at airports, seaports and land borders, signaling that enforcement will be as important as the tariff itself.
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