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The government has imposed 10% basic custom duty and 5% Agriculture Infrastructure and Development Cess (AIDC). file
The Central Government has increased the duty on import of gold and silver from 6% to 15%. This decision was taken in the order issued on Wednesday. The aim of the government is to reduce foreign purchases and reduce the pressure on the country’s foreign exchange reserves.
This decision may affect the demand for gold and silver in the country. India is the second largest consumer in the world. However, this may reduce the country’s trade deficit and provide some support to the rupee. The rupee had gone to all-time low yesterday i.e. on 12th May. Its price against the dollar had become 95.50.
The government has imposed 10% basic custom duty and 5% Agriculture Infrastructure and Development Cess (AIDC) on gold. In this way the total effective tax becomes 15%. Earlier, the tariff was reduced to 6% in the middle of 2024.
Possibility of increase in smuggling due to increase in taxes
At the same time, people associated with the industry say that increasing taxes may increase smuggling. Earlier, when duty was reduced, smuggling had reduced.
Surendra Mehta, National Secretary of India Bullion and Jewelers Association, said that the government has taken this step to keep the current account deficit under control. This decision may affect demand amid already high prices.
Imports may reach lowest level in 30 years
According to a Reuters report, India’s gold imports may reach the lowest level in the last three decades in April. After the sudden demand of 3% integrated GST on banks, they have stopped the shipment. India is the second largest gold consumer in the world.
In FY 2026, India has imported an average of 60 tonnes of gold every month. About 6 billion dollars i.e. about 57 thousand crore rupees were spent on this every month.
PM said twice – do not buy gold for one year
PM Modi has appealed to the countrymen for two consecutive days (on 10th and 11th May) not to buy gold for 1 year. PM had said…
There was a time when people used to donate gold in the interest of the country when there was a crisis. There is no need for donations today, but in the interest of the country, we have to decide that we will not buy gold jewelery if there is any program at home for the whole year. Our patriotism is challenging us to save foreign exchange and we have to accept this and save foreign exchange.
why say so: India buys about 99% of its gold consumption from abroad. This import bill of gold in 2025-26 was about Rs 6.4 lakh crore. Gold is at second place with 9% share in the total expenditure on goods purchased from abroad.
After this appeal of Modi, on May 11, shares of Kalyan Jewelers and Senco Gold fell by 10-10%. Shares of the country’s largest jewelery company Titan had fallen by 7%. PN Gadgil fell 8%, Thangamayil Jewelery 6% and other small jewelery stocks also fell.
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