NEW DELHI: The government has sharply raised import duties on gold, silver and platinum, as it looks to curb non-essential imports and shield foreign exchange reserves strained by surging crude oil and fertiliser costs amid the West Asia crisis.
Under a Finance Ministry notification issued on Tuesday, Customs duty on gold and silver imports has been increased from 6 per cent to 15 per cent, while the levy on platinum has risen from 6.4 per cent to 15.4 per cent. The revised rates came into force on Wednesday, and apply to gold and silver dore, coins, findings and related products.
The move effectively doubles the basic Customs duty on gold and silver to 10 per cent, while the agriculture infrastructure and development cess (AIDC) has been raised fivefold, from 1 per cent to 5 per cent. Together, the changes lift the effective import duty on the two metals to 15 per cent. Importers will also continue to pay 3 per cent Integrated GST (IGST), taking the overall tax incidence on imports to 18.45 per cent, up from 9.18 per cent earlier.
The decision follows a rare public appeal over the weekend from Prime Minister Narendra Modi urging Indians to avoid gold purchases, alongside unnecessary foreign travel and excessive fuel consumption in order to support the rupee and conserve foreign exchange.
Officials said the increase was aimed at moderating imports of precious metals, which account for large foreign exchange outflows while having only limited contribution in productive industrial activity. Precious metals, while culturally significant and widely used for savings, remain largely consumption- and investment-driven.
Imports of gold and silver rose 26.7 per cent year-on-year to $102.5 billion in 2025-26, with their share of total imports climbing to 14 per cent from 11.8 per cent a year earlier.
Foreign exchange resources, officials argued, must be prioritised for essential imports, including crude oil, fertilisers, industrial raw materials, defence equipment, critical technologies and capital goods.
Government sources described the increase as a calibrated intervention rather than an import restriction. The policy, they said, seeks to discourage discretionary demand through price signals while preserving market flexibility and consumer choice. They added that the measure aligned with Modi’s broader call for economic discipline and responsible consumption during a period of global uncertainty.
It also marks a renewed use of Customs duties as a policy instrument to prioritise strategic imports and reduce vulnerability to global shocks.
The higher duties are expected to raise domestic prices of gold and silver.
The government, in the past, had adjusted tariffs on precious metals in response to external sector pressures. In the Union Budget for 2024-25, the government had reduced duties on gold and silver from 15 per cent to 6 per cent, and on platinum from 15.4 per cent to 6.4 per cent, reflecting a more comfortable balance-of-payments position at the time. The latest move effectively reverses that reduction.
Data from the Directorate of Revenue Intelligence’s (DRI’s) Smuggling in India Report 2024-25 suggests that the earlier reduction in duties had helped curb smuggling activity. Customs authorities and the DRI seized around 2,600 kg of gold in 3,005 cases during 2024-25, roughly half the quantity confiscated a year earlier, when 4,972 kg was seized across 6,599 cases.
Nearly half of the seizures in 2024-25 occurred before the July 2024 duty reduction, with the highest monthly seizure recorded in April 2024, prior to the tariff cut. The DRI alone seized 1,073 kg of gold worth ₹785 crore during the year, with officials noting a marked decline in seizures after duties were lowered.
The Gem & Jewellery Export Promotion Council (GJEPC) acknowledged the government’s decision but questioned whether higher duties would significantly reduce imports. In a statement, the industry body said it remained committed to the principle of “Nation First” articulated by Modi, and added that it had convened a meeting of leading retailers and manufacturers and submitted proposals to the Prime Minister aimed at reducing import dependence. These included promoting lower-carat jewellery such as 14K and 9K products, expanding gold exchange schemes, reviving the Gold Monetisation Scheme and discouraging investment in gold bars and coins.
However, the council reiterated its opposition to higher import duties, arguing that such measures rarely suppress demand and instead inflate domestic prices. “It merely inflates prices. Despite gold prices doubling recently, imports have not declined proportionally. Such measures often fuel smuggling and escalate export costs,” the statement said.
GJEPC also warned that exporters are now required to furnish bank guarantees of ₹28-30 lakh per kg of duty-free gold sourced from nominated agencies, placing severe strain on working capital. It said the burden would fall disproportionately on micro, small and medium-sized manufacturers, which account for 80 per cent of its membership and are already grappling with a liquidity squeeze.
The council has urged the government to engage in dialogue for sustainable solutions that balance fiscal goals with export growth.
Source: Business Standard
