India has implemented stricter regulations for duty-free gold imports, capping imports at 100 kilograms per licence for jewellery exports under the Advance Authorisation scheme, as announced by the government in an official order. This move comes as the world's second-largest consumer of precious metals seeks to curb imports amid mounting structural challenges. The new restrictions represent a significant tightening of the duty-free import framework that previously allowed higher volumes for export-oriented jewellery manufacturing. The Advance Authorisation scheme, which previously had no import limits, now requires mandatory physical inspection for first-time applicants and mandates that subsequent authorisations depend on fulfilling at least 50% of export obligations.
India remains one of the world's biggest gold consumers, with most purchases imported due to social, cultural, economic and religious factors that are unlikely to change significantly. According to Business Standard reports, gold serves as a store of value and hedge against inflation, with even poor families preferring to keep savings in gold for stress periods. The pure investment demand has increased substantially, with exchange-traded fund demand surging from 7 tonnes in Q1 2025 to 20 tonnes in Q1 2026 according to World Gold Council data. Gold and silver imports jumped 26.7% year-on-year to USD 102.5 billion in FY2025-26, with their share in total imports rising to 14% from 11.8% in 2024-25.
The government has tightened conditions for the issuance and monitoring of advance authorisation for gold imports, introducing stricter verification processes. First-time applicants face mandatory physical inspection of manufacturing facilities to verify existence, capacity and operational status. Subsequent authorisations require fulfillment of at least 50% of export obligations. Holders must submit fortnightly performance reports duly certified by independent chartered accountants, while regional authorities must submit monthly reports to the DGFT containing detailed issuance information. These measures aim to ensure proper utilisation of duty-free imports and prevent misuse of the scheme.
International gold prices increased approximately 50% during FY26, while physical demand declined by about 5% compared to the previous year. However, the outgo increased over 24% during the same period, as reported by Business Standard. The duty increase may be tempered by expectations that it may be reversed once conditions improve, potentially lowering the value of existing holdings. Silver also faces challenges with higher duties pushing up prices of final goods due to its significant industrial use. The rupee hit a record low of 95.75 against the US dollar on Tuesday but recovered some ground after the gold import duty announcement.
The utilisation of concessional duty quota for gold imports from the UAE under the free trade agreement has remained modest, with actual imports under the Tariff Rate Quota (TRQ) mechanism accounting for only 5% (40 tonnes) in 2023-24 and 18% (about 140 tonnes) in 2024-25. According to official data, total gold imports stood at 795 tonnes in 2023-24 and 757 tonnes in 2024-25. The India-UAE Comprehensive Economic Partnership Agreement offers a duty concession of 1% over the prevailing customs duty for gold bullion imports, with the pact coming into force on May 1, 2022. The government has increased the import duty on gold from 6% to 15%, with the effective duty (including IGST) rising from 9.2% to 18.4%.
