India raises gold, silver import tariffs to 15% to curb demand

India raised import tariffs on gold and silver to 15% from 6%, a sharp policy turn that immediately lifted the cost of buying bullion abroad and signaled pressure on the country’s external accounts. The revised structure took effect on Wednesday, May 13, 2026, under Customs Notification No. 16/2026, with the Ministry of Finance setting a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess.

The move was aimed at curbing overseas purchases, narrowing the trade deficit and easing strain on foreign exchange reserves as the rupee came under pressure. It also underscored how closely the government is tying bullion policy to macroeconomic management. Prime Minister Narendra Modi had recently urged citizens to avoid buying gold for a year so India could conserve foreign exchange reserves, a rare attempt to influence consumer behavior as well as import flows.

The timing matters because India is the world’s second-largest consumer of gold and imports almost all of what it uses. Demand has been shifting too. In the March quarter, investment demand for gold surpassed jewellery consumption for the first time on record, while gold ETF inflows jumped sharply as investors sought diversification and a hedge against macroeconomic uncertainty. That shift shows gold is being treated less as ornament and more as a financial asset, even as prices stay elevated.

The higher duties could cool buying further. Industry reports had already pointed to April gold imports falling to around 15 metric tons, a near 30-year low outside the COVID period, after banks were hit by an unexpected tax demand and paused shipments. For consumers, that points to even higher local prices. For jewellers, it threatens sales at a time when household buying habits are already under pressure from strong bullion prices and weak equity returns.

Bullion dealers warned that the tariff hike could also revive smuggling and grey-market trade, which had eased after India cut duties in mid-2024. Surendra Mehta, national secretary of the India Bullion and Jewellers Association, said, "As expected, the government has raised duties to curb the current account deficit. However, this could affect demand, as gold and silver prices were already elevated." The policy may help the rupee in the short run, but it also risks pushing more trade into informal channels, a familiar trade-off when governments lean on commodity taxes to defend a weak currency.