New Delhi: The Central government has sharply increased import duties on gold and silver, raising the effective tax on bullion imports to 15 percent from the earlier 6 percent. The move comes amid growing concerns over foreign exchange outflows and follows recent appeals by Narendra Modi urging citizens to reduce non essential gold purchases.
Under the revised structure, imports of gold and silver will now attract a 10 percent basic customs duty along with a 5 percent Agriculture Infrastructure and Development Cess. The decision is aimed at discouraging excessive bullion imports at a time when India is attempting to conserve foreign exchange reserves amid global economic uncertainty.
Demand for gold in India has remained strong in recent months, particularly among investors seeking safer assets during volatile market conditions. The surge in gold prices and weaker returns from equities over the past year have further increased interest in bullion investments.
According to recent industry data, inflows into India’s gold exchange traded funds recorded a sharp rise during the March quarter, reflecting strong investor appetite for the precious metal.
The government had already initiated measures to slow gold imports by imposing a 3 percent Integrated Goods and Services Tax on gold and silver imports. Following that move, several banks temporarily paused bullion imports for over a month, contributing to a significant drop in imports during April, which reportedly touched one of the lowest levels seen in nearly three decades.
Although imports resumed after banks adjusted to the IGST requirement, bullion dealers believe the latest increase in customs duties could once again reduce official imports in the coming months.
Market experts have also expressed concern that higher import taxes may encourage illegal trade and smuggling activities. Bullion traders believe the widening gap between international and domestic prices could create strong incentives for unauthorised gold inflows through grey market channels.
The latest duty revision is being viewed as part of the government’s broader strategy to manage foreign exchange pressures, reduce dependence on imports and stabilise the country’s external financial position during a period of rising global uncertainty.
