The government has implemented a significant increase in import duties on gold and silver to 15% from 6%, as reported by PTI. This hike, effected through a Finance Ministry notification, comes into effect from May 13 and is aimed at curbing inbound shipments of precious metals amid a rising import bill triggered by the West Asia crisis. The revised structure includes changes in the social welfare surcharge (SWS) and the agriculture infrastructure and development cess (AIDC), creating substantial cost increases for gold importers. The latest developments highlight the broader geopolitical context, with the hike reflecting global financial instability and currency pressures affecting international trade. Chief Economic Advisor V Anantha Nageswaran has described the ongoing West Asia crisis as a 'live balance of payments stress test' with direct consequences for inflation, the current account, and the exchange rate.
Despite Prime Minister Narendra Modi's appeal for austerity, gold prices have experienced a dramatic surge of ₹13,400 per sovereign in Kerala, as reported by Zee News. In the national capital, gold prices increased by ₹1,500 or nearly 1% to ₹1,56,800 per 10 grams on Tuesday from Monday's closing level of ₹1,55,300 per 10 grams, according to PTI. Silver prices also advanced by ₹12,000 or 4.53% to ₹2,77,000 per kg. This sharp price increase has been triggered by the significant hike in import duty to 15%, creating panic buying conditions as families prepare for the upcoming wedding season. The price surge reflects broader global economic pressures including oil prices, dollar fluctuations, and geopolitical tensions affecting international trade flows.
India's gold imports surged more than 24% to an all-time high of USD 71.98 billion in 2025-26, with volume shipments dipping 4.76% to 721.03 tonnes, as reported by PTI. The government had previously cut customs duty on gold to 6% in the 2024-25 budget to boost the domestic gems and jewellery industry and curb illegal smuggling. India is the world's second-biggest gold consumer after China, with imports largely driven by the jewellery industry. The Indian rupee hit a record low of 95.63 against the US dollar on Tuesday, adding to the pressure on precious metals imports. The government had previously raised gold import tax to 15% in 2022 to check the capital account deficit amid a falling rupee due to the Russia-Ukraine war.
The latest duty hike comes as India faces mounting economic pressures, with forex reserves falling by $38 billion and the rupee hitting 95.75 against the dollar. According to recent reports, April gold imports fell to near 30-year lows after a 3% IGST on gold imports pushed banks to stop imports completely for over a month. The government's austerity measures come as India battles a high import bill from oil and fertiliser due to the US-Iran war, which has been ongoing for the last 10 weeks, leading to the effective closure of the Strait of Hormuz. India imports 60% of its LPG usage, with 90% flowing through the now-closed Strait of Hormuz. Modi has called for judicious use of fuel, postponement of gold purchases and foreign travel to conserve foreign exchange amid the West Asia crisis.
