Import duty on gold works: Official says volumes down to 25-30 tonnes/month

Thu June 18 2026

The recent hike in import duty on gold is yielding the desired outcome, with monthly gold imports declining significantly to 25-30 tonnes from the earlier average of 70-80 tonnes, a senior government official said on Thursday. The shift has also led to increased recycling of old gold in the domestic market, the official added.

The government raised the basic customs duty on gold and silver to 10 per cent from 5 per cent, along with a 5 per cent Agriculture Infrastructure and Development Cess (AIDC), taking the effective import duty to 15 per cent from 6 per cent with effect from May 13, 2026. This marked the steepest single increase in duty on record and reversed the cut implemented in July 2024.

The move was aimed at curbing excessive imports, easing pressure on the country’s foreign exchange reserves and narrowing the trade deficit at a time when gold imports had contributed substantially to the current account burden. India, the world’s second-largest consumer of gold, imported record-high values in FY26, with the metal accounting for a significant portion of the non-oil import bill.

According to the official, who did not wish to be named, the higher landed cost has discouraged fresh imports while encouraging jewellers and consumers to opt for recycled gold.

“The policy is working as intended. We are seeing a clear reduction in import volumes and a corresponding rise in the exchange and recycling of old jewellery,” the official said.

According to trade data released by the Ministry of Commerce, gold imports stood at around $5.63 billion in April 2026 before falling to about $3.42 billion in May 2026 after the duty hike.

Prime Minister Narendra Modi had also appealed to citizens to moderate gold purchases for at least a year to conserve foreign exchange.

Source: https://www.business-standard.com