India raises import duties on gold: A timeline of hikes, cuts and comebacks
New Delhi, May 13, 2026
India raises gold, silver and platinum import duties to curb overseas demand, ease pressure on forex reserves and narrow current account deficit amid global uncertainty
The government on Wednesday increased customs duties on gold and silver to 15 per cent from 6 per cent, while raising the duty on platinum imports to 15.4 per cent from 6.4 per cent. The move is aimed at curbing overseas purchases of precious metals and easing pressure on India’s foreign exchange reserves.
Adjustments have also been made to related products, including gold and silver dore, coins and findings.
The revised structure comprises a 10 per cent basic customs duty (BCD) and a 5 per cent Agriculture Infrastructure and Development Cess (AIDC), taking the effective tax on gold and silver imports to 15 per cent. The decision comes days after Prime Minister Narendra Modi urged citizens to avoid buying gold for a year.
Why the government increased gold duties
Despite being the second largest consumer of gold, India does not produce significant quantities of gold, and nearly all domestic demand is met through imports paid for in US dollars. In 2025–26, gold imports accounted for around 9-10 per cent of India’s total import bill. In absolute terms, the country spent a record $71.98 billion on gold imports to meet domestic demand.
High gold imports can put pressure on the economy in several ways:
Widen the trade deficit
Increase pressure on the current account deficit (CAD)
Lead to higher foreign exchange outflows
India’s foreign exchange reserves have also eased from recent highs amid the Iran conflict and elevated crude oil prices, adding to external sector pressures.
Hence, the increase in gold duties is not a revenue-raising measure. It is also a macroeconomic step aimed at cooling gold demand, making imports more expensive, and protecting foreign exchange reserves during a period of heightened geopolitical uncertainty linked to the ongoing US-Iran conflict.
Timeline: How duties rose, fell, and returned
India’s gold import duty regime has shifted sharply over the years, reflecting the government’s efforts to manage imports, protect forex reserves, curb smuggling and support domestic industry:
Pre-2012: Before 2012, India’s gold import duty was not linked to the value of the metal. Instead, the government imposed a flat nominal customs duty of Rs 300 per 10 grams on standard gold imports.
2012: The government revised the duty structure to align it with rising gold prices. The import duty was changed from a fixed levy to a value-based system and set at 2 per cent of the gold’s value. The effective burden, which earlier worked out to around 1.08 per cent at prevailing prices, nearly doubled under the revised structure.
2013: In 2013, the government raised gold import duties three times as India grappled with a record-high current account deficit, a weakening rupee and mounting foreign exchange outflows linked to gold imports.
January 2013: Duty raised from 4 per cent to 6 per cent
June 2013: Duty increased from 6 per cent to 8 per cent
August 2013: Duty hiked further from 8 per cent to 10 per cent
2014-2018: Between 2014 and 2018, the 10 per cent import duty largely remained the default policy setting
2019: Gold customs duty were raised from 10 per cent to 12.5 per cent to boost revenue and curb imports amid a falling tax-to-GDP ratio. The move was part of a wider tariff hike across 75 imported products.
2021: In the Union Budget import duties were slashed from 12.5 per cent to 10.75 per cent to combat large-scale smuggling, counter skyrocketing retail prices, and enhance export competitiveness
2022: Centre hiked gold import duty to 15 per cent from 10.75 per cent to check current account deficit and rising import of gold
2024: The duty was reduced to 6 per cent to support the domestic gems and jewellery industry, curb illegal smuggling and reduce local prices.
2026: Duties raised to 15 per cent amid West Asia war and pressure on forex reserves
How does the duty hike help the economy?
The increase in gold import duties is expected to support the economy in several ways. By making gold imports more expensive, the government aims to reduce demand and conserve foreign exchange for essential imports such as crude oil. The move could also help narrow the CAD, support the rupee, discourage speculative gold hoarding, and encourage gold recycling as well as domestic value addition.
However, higher duties also carry risks. A sharp rise in import costs can make gold smuggling profitable once again, especially through neighbouring countries. Higher duty gaps may also encourage cash transactions and informal trade channels, creating fresh challenges for enforcement agencies.
Gold occupies a uniquely sensitive position in India’s economic policy because it is simultaneously a household savings instrument, a key raw material for the jewellery industry, a cultural asset, and one of the country’s largest import items. As a result, whenever pressure builds on India’s foreign exchange reserves, governments often turn to import duties as a quick policy tool, even though such measures can create distortions elsewhere in the economy.
[The Business Standard]
