The Centre has imposed fresh restrictions on gold imports under the Advance Authorisation (AA) scheme, limiting duty-free imports to a maximum of 100 kilograms per exporter. According to a public notice from the Directorate General of Foreign Trade, this represents a significant change from the previous policy of no upper limit on such imports. The scheme allows exporters to import raw materials and inputs without paying customs duty if those materials are used to manufacture export products. "AA for import of gold shall be issued, subject to a maximum remissible quantity of 100 kilograms," the DGFT stated, emphasizing that there was no quantitative restriction on gold imports under the scheme earlier.
The government has introduced stricter checks for companies applying under the scheme for the first time. As reported by The Financial Express, mandatory physical inspection of manufacturing facilities will be conducted to verify the existence, capacity and operational status of the unit. Additionally, exporters importing gold under the scheme will now have to submit a performance report every two weeks, which must be certified by an independent chartered accountant and include details of both imports and exports. Any subsequent AA for gold imports will be considered only upon fulfillment of at least 50 per cent of export obligation. The concerned regional authority of the DGFT will also be required to submit monthly reports containing details related to issuance of Advance Authorisations.
The new restrictions follow the government's decision to increase import duty on gold and silver from 6 per cent to 15 per cent, with platinum duty raised from 6.4 per cent to 15.4 per cent. According to The Financial Express, with Integrated GST (IGST) included, the total effective duty on gold and silver has increased to 18.45 per cent from 9.18 per cent earlier. The duty hike followed Prime Minister Narendra Modi's recent appeal asking citizens to reduce non-essential spending, including gold purchases, amid global fuel and economic concerns linked to tensions in West Asia. "In order to prevent any possibility of misuse of the AA Scheme, these instructions are being issued," sources said, noting there was a strong possibility of the scheme being misused to import large quantities of gold immediately after the import duty hike and benefit from price arbitrage.
India's gold and silver imports rose 26.7 per cent year-on-year to USD 102.5 billion in FY2025-26, with their share in India's total imports increasing sharply from 11.8 per cent to 14 per cent. As reported by The Financial Express, India, which is the world's second-largest consumer of gold after China, depends heavily on imports to meet jewellery demand. India's gold imports alone surged over 24 per cent to a record USD 71.98 billion in 2025-26, though in volume terms, shipments declined 4.76 per cent to 721.03 tonnes during the year. Large gold imports also lead to a major outflow of foreign exchange, contributing to pressure on India's foreign exchange reserves amid global uncertainty and the West Asia crisis.
The rupee had touched a record low of 95.75 against the US dollar on May 12 before recovering some ground on Wednesday after the government announced the duty hike. According to The Financial Express, officials said the tighter rules were introduced to prevent possible misuse of the scheme, especially after the sudden rise in import duty created chances for price arbitrage. The government also significantly raised the effective tax burden on bullion imports through Wednesday's duty hike, with basic customs duty on gold doubled to 10 per cent and the agriculture infrastructure and development cess (AIDC) increased fivefold from 1 per cent to 5 per cent, taking the total levy on bullion imports to 18.45 per cent from 9.18 per cent earlier.
