The government announced a significant increase in import duties on gold and silver, raising the basic customs duty by 10% and imposing a 5% Agriculture Infrastructure and Development Cess (AIDC) on gold and silver imports. According to reports from Moneycontrol, this takes the effective import tax to 15% from the previous 6%, as the government seeks to curb overseas purchases of precious metals and reduce pressure on foreign exchange reserves. Import duty on platinum has also been raised from 6.4% to 15.4%, with corresponding changes made to duties on related products including gold and silver dore, coins and jewellery findings. The revised customs duty structure has come into force from May 13, 2026, following customs notifications issued by the Ministry of Finance on May 12. However, Sector veteran Pankaj Parekh noted that the total duty, inclusive of agriculture cess and Integrated GST, has nearly doubled to 18.45% to reduce forex drain, as reported by The Economic Times.
Following the announcement, gold and silver prices surged sharply on the Multi Commodity Exchange (MCX). Around 9.59 am, gold was trading at ₹1,63,000 while silver touched ₹2,96,600, with both rising more than 6%. In the national capital, gold prices climbed ₹1,500, or nearly 1%, to ₹1,56,800 per 10 grams, while silver prices jumped ₹12,000, or 4.53%, to ₹2,77,000 per kg. Since India depends heavily on imported gold, higher customs duties directly increase the landed cost of the metal, with jewellers expected to pass on the additional burden to consumers, making jewellery and bullion more expensive. The move comes as India faces rising pressure on its foreign exchange reserves due to the ongoing West Asia conflict, soaring crude oil prices and disruption in the Strait of Hormuz.
Industry leaders expect the duty increase to have significant near-term effects on consumer behavior. Suvankar Sen, Managing Director and CEO at Senco Gold, told Moneycontrol that the move may lead to a moderation in gold imports to the extent of 10–15%. However, he noted that there is a broader understanding that elevated duties on gold could remain in place for at least the next year. "The duty would remain high till the Middle East crisis remains, crude oil prices remain high, and the oil supply chain becomes stable," Sen explained to The Economic Times. "The volumes might get impacted by 10-15 per cent, but value-wise it will remain at a higher level. Consumers will buy lighter-weight jewellery," he added. Anjali Jewellers Director Annargha Uuttiya Chowdhuury said the government periodically reviews import duties in line with evolving economic priorities, and the latest increase may only have a limited impact on consumers. MP Ahammad, Chairman of Malabar Group, expects the higher import duties to influence short-term buying patterns and lead consumers to become more value-conscious, though he emphasized that the country's underlying affinity towards gold remains fundamentally strong.
Industry experts see the duty increase as creating opportunities for old gold exchange programs and strengthening domestic recycling. Amit Modak, Director and CEO at PNG Sons, told Moneycontrol that the revised duty structure will raise the valuation of gold already lying in vaults and existing inventories held by jewellers. "A stronger domestic recirculation ecosystem could sustain employment in the jewellery sector and help states preserve GST revenues from organised trade," said T S Kalyanaraman, Managing Director at Kalyan Jewellers India Ltd, as reported by The Economic Times. Kalyan Jewellers has launched the 'Nation First - Gold4India Initiative' in response to the Prime Minister's appeal and aims to reduce gold imports by 5 tonnes during the current financial year by encouraging the circulation of idle domestic gold. Raghav Dhir, Director at Dhirsons Jewellers, emphasized that this is a significant policy shift that presents a timely opportunity for consumers to rethink how they treat gold, while encouraging customers to exchange their old gold lying idle at home. The government has also increased duty on several precious metal products, including silver findings (5%), silver (5%), platinum findings (5.4%), precious metal waste, catalysts and coins.
According to sources, the move is aimed at reducing "discretionary imports" like gold and prioritising foreign exchange for essential imports" such as crude oil, fertilisers, industrial raw materials, defence equipment and capital goods that directly support economic activity and food security. The government wants to "prudently manage emerging risks and reduce vulnerability to potential external shocks" amid "extraordinary" global conditions. India's foreign exchange reserves have fallen sharply since the outbreak of the West Asia conflict, with RBI data showing reserves declined to $690 billion in the week ended May 1 from a record $728.49 billion in February. The Indian rupee has come under severe pressure, hitting a record low of 95.63 against the US dollar as crude oil prices surge amid fears of supply disruption in West Asia. Sources emphasized that "India's foreign exchange resources must be prioritised towards essential imports" to maintain macroeconomic stability during this period of global uncertainty.
