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Explained: Why India Raised Gold Import Duty, And What It Means For You
India raised the effective import duty on gold and silver from 6% to 15% starting May 13, 2026, via 10% Basic Customs Duty and 5% Agriculture Infrastructure and Development Cess. The move aims to curb gold demand, save foreign exchange reserves, and weather global tensions, with revisions to duties on jewellery findings and recycling incentives; market and industry responses noted both potential price effects and grey-market risks.
Why It Matters
The policy seeks to reduce dollar outflows and strengthen economic resilience by cooling gold demand, while signaling Türkiye financial stability amid global stress; potential grey-market risks and mixed industry responses are noted.
Timeline
8 Events
Context: 2025-26 gold imports as share of India's import bill
2025-26
In 2025-26, gold imports made up 9-10% of India's total import bill, with India paying $71.98 billion to import gold.
Industry response: Malabar Gold & Diamonds proposal on GMS
May 13, 2026
Malabar Gold & Diamonds submitted a proposal to the government recommending enhancements to the Gold Monetisation Scheme to support PM Modi's appeal on responsible gold consumption and strengthen India's economic resilience.
Industry concerns: grey market risk and trader reactions
May 13, 2026
Bullion industry leaders warn the grey market may revive as duty gaps widen; Rajesh Rokde of the All India Gems and Jewellery Council cautioned that smuggling could grow.
Gold and silver price reaction on MCX
May 13, 2026
As news of the duty hike spread, gold prices on MCX rose by more than 6%, trading around ₹1,63,000 per 10 grams and silver around ₹2,96,600 per kg.
Rationale: move to save dollars amid tensions and IMF CAD concerns
May 13, 2026
Officials describe the measure as a macro-economic signal to save dollars, cool gold demand, and protect forex reserves in a context of global stress due to the Iran war, with the IMF projecting a wider current account deficit if the war drags on.
Notification revises duties on jewellery findings and industrial inputs; recycling concession
May 13, 2026
The notification also revises duties on jewellery findings and certain industrial inputs, and offers concessional rates (4.35-5%) for recycling/recovery categories like spent catalysts/ash containing precious metals—nudging the industry toward recycling over fresh imports.
Gold Import Duty hike becomes effective from May 13, 2026
May 13, 2026
The government raised the effective import duty on gold and silver from 6% to 15% (10% Basic Customs Duty and 5% Agriculture Infrastructure and Development Cess) from May 13, 2026, via Customs Notification No. 16/2026.
Prime Minister Modi urges citizens to avoid buying gold for a year
May 2026
Days before the duty hike, Prime Minister Narendra Modi urged citizens to avoid buying gold for a year.