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The government has imposed 10% basic custom duty and 5% Agriculture Infrastructure and Development Cess (AIDC). file
The Government of India 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.
Its decision may impact the demand for gold and silver in India, which is the world’s second largest consumer. However, this may reduce the country’s trade deficit and provide some support to the rupee, which is one of the weakest currencies in Asia.
The government has imposed 10% basic custom duty and 5% Agriculture Infrastructure and Development Cess (AIDC). In this way the total effective tax becomes 15%. Earlier, the tariff was reduced to 6% in the middle of 2024.
Smuggling likely to increase again due to increase in taxes
People associated with the industry have warned that increasing taxes may increase smuggling again. Earlier, when duty was reduced, smuggling had reduced. A bullion dealer with a private bank in Mumbai said good profits could be made from smuggling at current prices.
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. He said this decision could affect demand amid already high prices.
Imports may reach lowest level in 30 years
According to a Reuters report, India’s gold imports in April may reach the lowest level in the last three decades. 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 has been spent on this every month.
PM said twice – do not buy gold for one year
PM Modi has also asked the countrymen for two consecutive days (10 and 11 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 charity today, but in the interest of the country, we have to decide that we will not buy gold jewelery if there is no program at home for a year. Our patriotism is challenging us to save foreign exchange and we have to accept this and save foreign exchange.
why say so: PM Modi made this appeal to save India’s foreign exchange reserves. 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 Titan, the country’s largest jewelery company, fell by 7%. PN Gadgil 8%, Thangamayil Jewelery 6% and other small jewelery stocks also declined.
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