India hikes gold import duty 15%

India more than doubled import duties on gold and silver to 15% on May 13, days after Prime Minister Narendra Modi publicly urged Indians to avoid buying gold for a year, according to government orders and multiple media reports. The move raised the levy from 6% and was presented as an effort to curb imports, support the rupee and ease pressure on foreign-exchange reserves. (msn.com) India depends on imports for nearly all of its gold consumption, making bullion a sensitive part of its trade bill. Industry groups and dealers said the sharper tariff could hit demand and revive smuggling incentives. (businesstoday.in) ### How was the new 15% duty put together? The May 13 order set the effective import duty on gold and silver at 15%, replacing the earlier 6% rate. Business Today reported that the new structure combines a 10% basic customs duty with a 5% Agriculture Infrastructure and Development Cess. (msn.com) The Hindu said the change lifted the effective rate on imports to 18.4% once other levies are included. The government’s stated aim was to reduce overseas purchases of precious metals and conserve foreign exchange. Reuters reported that the tariff increase was part of a broader effort to ease pressure on India’s reserves and support the rupee. (msn.com) ### Why did New Delhi act now? Narendra Modi urged citizens on Sunday to avoid buying gold for a year, according to Business Today and other Indian outlets cited in search results. The appeal came as the government stepped up efforts to restrain dollar outflows linked to non-essential imports. April data had already shown a sharp slowdown in bullion inflows. (businesstoday.in) Reuters reported on April 30 that India’s gold imports were set to fall to around 15 metric tons in April 2026, near a 30-year low outside the COVID period, after banks were hit by an unexpected tax demand that disrupted shipments. (msn.com) ### Why does gold matter so much to India’s external accounts? India is one of the world’s biggest gold consumers and meets almost all of that demand through imports. That makes gold purchases a direct drain on dollars when prices are high or investment demand rises. Reuters and Indian media reports said the tariff change was designed to reduce that import dependence at a time of pressure on reserves. (businesstoday.in) World Gold Council data cited by Business Today and Business Standard showed inflows into India’s gold exchange-traded funds jumped 186% year on year in the March quarter to a record 20 metric tons. That increase suggested investor demand for gold exposure was already strengthening before the duty increase. (msn.com) ### What are traders and jewellers warning about? Surendra Mehta, national secretary at the India Bullion and Jewellers Association, said the government’s aim was to curb the current account deficit but warned that higher prices could hurt demand, according to Business Today. A Mumbai-based bullion dealer cited by the publication said higher duties could make illegal imports profitable again. (msn.com) Rediff reported that exporters and jewellery traders also warned the higher levy could spur grey-market activity and smuggling. Those concerns echo earlier periods when India maintained higher bullion import duties and dealers said unofficial channels became more attractive. (businesstoday.in) ### What has the market reaction looked like so far? Reuters reported on May 13 that gold discounts in India widened to more than $200 an ounce, a record, as the duty hike pushed domestic prices higher and triggered investor selling in already weak physical demand conditions. That discount is one of the clearest early market signals of how abruptly the tariff change hit local pricing. (businesstoday.in) Business Standard reported that gold and silver exchange-traded funds rose after the announcement, while analysts tracked the effect on domestic bullion prices and retail demand. ### What should readers watch next? May trade flows and local bullion pricing will show whether the higher levy reduces official imports or shifts activity elsewhere. (rediff.com) Reuters has already reported April imports at roughly 15 metric tons and, a day after the tariff move, record local discounts of more than $200 an ounce. Further reporting from traders, banks, the bullion industry and customs data will indicate whether official imports stay weak after May 13. (msn.com) (business-standard.com) (msn.com)