Import Duty on Gold and Silver
Context:
The Government of India has increased the effective import duty on gold and silver from around 9.2% to 18.4%, effective from May 13, 2026.
India’s gold imports increased by over 24% to an all-time high of USD 71.98 billion in 2025-26 compared to USD 58 billion in 2024-25.
The move comes amid rising crude oil prices, geopolitical tensions in West Asia, pressure on the rupee, and declining foreign exchange reserves.
Changes in Duty Structure
Earlier, gold and silver imports attracted:
5% Basic Customs Duty (BCD),
1% Agriculture Infrastructure and Development Cess (AIDC),
Along with 3% IGST.
The government has now increased:
BCD to 10%,
And AIDC to 5%, significantly raising the overall import duty.
Reasons for the Duty Hike
India imports most of its gold demand, leading to high outflow of foreign exchange.
India’s trade deficit rose to USD 333.2 billion during 2025-26 partly because of rising gold imports.
The government aims to reduce non-essential imports and conserve foreign exchange reserves for critical imports such as crude oil and fertilisers.
Rising oil prices and disruptions linked to the West Asia crisis have increased pressure on India’s current account deficit and rupee stability.
Impact of the Duty Hike
The increase in import duty will raise domestic prices of gold and silver.
Higher prices may discourage gold consumption and speculative investment demand.
The government expects the move to reduce pressure on foreign exchange reserves by reducing gold imports and improve macroeconomic stability by narrowing current account deficit and stabilizing rupee.
However, industry experts have warned that higher duties may encourage gold smuggling and adversely affect gems and jewellery sector.