The Union government on Wednesday, May 13 sharply increased import duties on gold and silver as part of a broader push to curb rising precious metal imports and reduce pressure on India’s foreign exchange reserves amid the ongoing crisis in West Asia.
According to notifications issued by the Finance Ministry late on May 12, the effective import tax on gold and silver has been doubled from around 9.2% to 18.4%, with the revised rates coming into effect from May 13.
The government raised the basic customs duty on gold and silver from 5% to 10%, while the Agriculture Infrastructure and Development Cess (AIDC) was increased from 1% to 5%. Along with the existing 3% Integrated Goods and Services Tax (IGST), the total effective import tax now stands at approximately 18.4%.
Import duty on platinum has also been increased from 6.4% to 15.4%, while corresponding changes have been made for related products including dore bars, coins and jewellery findings.
The tariff hike comes days after Prime Minister Narendra Modi urged citizens to avoid non-essential gold purchases for at least a year in order to conserve foreign exchange reserves amid rising global economic uncertainty linked to the conflict in West Asia.
Addressing a public meeting on May 10, Modi had appealed to people to reduce discretionary imports, revive austerity measures such as work-from-home practices and minimise fuel consumption to help India cope with increasing global energy prices and supply chain disruptions.
Government sources told news agencies that the latest increase in duties was aimed at reducing “discretionary imports” such as gold and silver so that foreign exchange could be prioritised for essential imports including crude oil, fertilisers, industrial raw materials, defence equipment and capital goods.
The move follows growing concern within the government over rising bullion imports and their impact on India’s trade deficit and currency stability. India remains the world’s second-largest consumer of gold after China and the largest consumer of silver, relying heavily on imports to meet domestic demand.
According to official data, India’s gold imports rose more than 24% to a record USD 71.98 billion in 2025-26 despite a decline in import volumes, largely because of soaring international prices.
The duty hike also comes amid escalating oil prices due to the ongoing West Asia conflict and disruptions in shipping routes through the Strait of Hormuz, through which a significant portion of India’s crude oil imports pass. Brent crude prices have reportedly surged from around USD 73 per barrel before the conflict to nearly USD 107 per barrel, after briefly touching USD 126 per barrel in April.
India imports nearly 87% of its crude oil requirement, with around 46% of those shipments moving through or near the Strait of Hormuz. The country also imports about 60% of its LPG requirement, most of it from the Gulf region.
Economists say the higher tariffs could help reduce imports, narrow the current account deficit and provide some support to the rupee, which has been among Asia’s weaker-performing currencies in recent months.
However, bullion dealers and industry representatives warned that the steep increase could significantly raise domestic gold and silver prices and potentially revive smuggling networks that had declined after the government reduced customs duties in the 2024-25 Budget.
The increase has already triggered a sharp rise in domestic bullion prices. Following the announcement, gold and silver prices surged on the Multi Commodity Exchange (MCX), with gold trading around Rs 1,63,000 and silver touching Rs 2,96,600 during morning trade, both recording gains of more than 6%.
In Delhi markets, gold prices rose by around Rs 1,500 to Rs 1,56,800 per 10 grams, while silver prices jumped Rs 12,000 to Rs 2,77,000 per kilogram.
The Global Trade Research Initiative (GTRI) backed the government’s move and supported Modi’s appeal to reduce gold purchases, saying rising bullion imports were placing severe pressure on India’s external finances.
Demand for gold in India has remained strong over the past year despite elevated prices. According to the World Gold Council, inflows into India’s gold exchange-traded funds (ETFs) rose 186% year-on-year during the March quarter to a record 20 metric tonnes.
India had already tightened bullion imports in recent weeks by levying a 3% IGST on gold and silver imports, a move that reportedly forced banks to temporarily halt imports for more than a month. April imports subsequently fell to near three-decade lows.