The Indian government's decision to increase import duties on gold and silver has resulted in a dramatic surge in smuggling activities. According to reports from The Hindu BusinessLine, the government more than doubled Customs duty on gold and silver to 15 per cent from 6 per cent on May 13, including 5 per cent Agriculture and Infrastructure Development Cess. This policy change has pushed precious metal trade into underground markets, with seizure data revealing the scale of the shift.
The impact of the duty hike became immediately evident in seizure statistics. As reported by The Hindu BusinessLine, silver consignment seizures increased by more than 10 times between May 13 and June 30 compared with the April 1-May 12 period. Gold consignment seizures jumped 186 per cent during the same timeframe. Minister of State for Commerce and Industry Jitin Prasada confirmed that cases filed for smuggling increased to 267 between May 13 and June 30, with 160.91 tonnes of gold seized and 116 persons arrested.
The current surge contrasts sharply with recent declining trends in precious metal smuggling. According to data provided by the Government in the Lok Sabha, gold smuggling had declined from 6,599 cases in 2023-24 to 3,005 in 2024-25, representing a 75 per cent drop. The amount of gold seized and number of arrests also declined during this period. Silver smuggling cases fell to one-fifth of 2024-25 levels in 2025-26, with only 8 arrests made during April 1-May 12 compared to 2 arrests thereafter.
Industry experts confirm the policy's unintended consequences. Prithviraj Kothari, Managing Director at RiddiSiddhi Bullions Ltd. and President of India Bullion and Jewellers Association Ltd., reported that in the seven weeks after the duty hike, gold seizures jumped nearly 60 per cent and silver seizures rose almost nine-fold on a per-day basis. As reported by The Hindu BusinessLine, Kothari stated that when the price of doing things legally goes up, some trade simply goes underground, with enforcement able to catch more but never all of it.
Despite the surge in smuggling, the government maintains its enforcement approach. According to Prasada's statement in the Lok Sabha, customs field formations and DRI maintain constant vigil and operational readiness to prevent and detect smuggling activities. The government raised import duties on gold and silver to conserve foreign exchange reserves, curb non-essential imports, and protect the rupee amid growing global economic pressures. Gold, which reached a record high of $5,608 an ounce on January 29, has since shed over 27.5 per cent of its gains, currently trading at $4,082 an ounce.
