India has increased tariffs on gold and silver imports to 15%, a move announced on May 13 aimed at narrowing a ballooning trade deficit and easing pressure on dwindling foreign exchange reserves. The new structure includes a 10% basic customs duty paired with a 5% Agriculture Infrastructure and Development Cess, targeting a sector that accounts for nearly 11% of the country’s total imports.
Import duties for the precious metals had previously sat at just 6%.
The decision comes as India’s merchandise trade deficit swelled to over $330 billion in the financial year ending March, up from $280 billion the year prior. Gold demand, in particular, has surged, with the value of imports nearly doubling year-on-year to a record $25 billion in the first quarter alone, according to the World Gold Council. Monthly gold imports also climbed to an average of 83 tonnes in the first two months of this year, compared to 53 tonnes across 2025.
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Prime Minister Narendra Modi has taken to public appeals, urging citizens to refrain from buying gold for a year to safeguard forex reserves. In a separate call just days before the tariff announcement, he also encouraged fuel conservation through public transport, working from home, and carpooling amid escalating energy costs tied to conflicts in Iran and reliance on the Strait of Hormuz for 50% of crude imports.
Investor enthusiasm for gold as a safe haven has been evident, with inflows into gold exchange-traded funds soaring 186% year-on-year to a record 20 metric tons in the March quarter, per World Gold Council data. Yet, the tariff increase follows a 3% integrated goods and services tax levied weeks earlier, which had already slashed April gold imports to a near 30-year low before banks resumed shipments.
Energy remains a parallel strain, with crude and petroleum products comprising 22% of total imports and 85% of fuel needs sourced externally.
“Energy costs are still front and center, and while these are elevated, we expect pressure on the rupee will persist,” said Vishrut Rana, Asia-Pacific Economist at S&P Global Ratings. With the rupee hitting record lows in recent days, the government’s latest measures aim to stem outflows, though at the potential cost of curbing demand in a market driven by both cultural and investment fervor.
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