India gold imports sink 70% after 15% duty hike

What changed, and why it matters

India’s gold imports have dropped sharply after the government more than doubled import duty on the precious metal to about 15%, effective May 13, 2026. A government source said monthly gold imports fell to roughly 25-30 tonnes within a month of the hike, compared with 75-100 tonnes earlier. The move is part of broader efforts to curb non-essential imports and reduce pressure on foreign exchange reserves by containing the import bill. The change has also coincided with softer jewellery demand and higher gold prices, according to the same source. Industry estimates separately show physical demand fell steeply in late May, underlining how quickly consumer buying can respond to tax and price changes.

The duty hike: from 6% to about 15%

As of May 13, the import duty on both gold and silver was raised from 6% to 15%, according to the government source cited. Under the revised framework, Basic Customs Duty (BCD) on gold, silver and platinum was increased from 5% to 10%. The Agriculture Infrastructure and Development Cess (AIDC) was also raised, pushing the effective import duty to approximately 15%. In another disclosure, the effective duty is described as 18.45% when 3% IGST is included. The step reverses the July 2024 duty cut, and is described as the steepest single increase on record.

Imports fall to 25-30 tonnes a month

A government source said the duty hike is already “working” as measured by the near-term decline in inflows. Gold imports reportedly moderated to about 25-30 tonnes per month after the hike, down from an earlier range of 70-100 tonnes. Another official estimate described the earlier monthly flow at 75-100 tonnes, again indicating a large fall in the immediate aftermath. The decline was pegged at roughly 70% in the official comments. The same source linked the weaker import trend to a combination of high gold prices, lower jewellery demand, and increased recycling of gold globally.

Import value data: April vs May 2026

Trade data from the Union Ministry of Commerce shows a clear shift in import values around the policy change. Gold imports were reported at about USD 5.63 billion in April 2026. After the May 13 duty hike, imports fell to about USD 3.42 billion in May 2026. While import values can move with both prices and quantities, the step-down in value aligns with the government’s indication that monthly import volumes moderated sharply.

Physical demand drops in late May: IBJA estimates

Early industry estimates suggest demand cooled quickly at the retail end. According to the India Bullion & Jewellers Association (IBJA), gold demand fell to around 7.5 tonnes in the fortnight ended May 27, compared with about 25 tonnes in the same period last year. That implies a decline of nearly 70% in fortnightly demand on a year-on-year basis. IBJA National Secretary Surendra Mehta said reports from jewellers across India indicated a 70% drop in demand after the duty increase. Separate context also pointed to tepid consumer sentiment amid higher fuel and food prices linked to the Iran war.

FY2025-26 context: record value imports, softer volumes

The duty move follows a period where gold and silver imports were contributing to a wider trade deficit and current account deficit (CAD), as described in the provided material. Gold imports rose 24% to an all-time high of USD 71.98 billion in 2025-26. But in volume terms, imports dipped 4.76% to 721.03 tonnes. This contrast highlights how price levels can lift import values even when tonnage does not increase.

Other measures: cap under Advance Authorisation

Beyond the duty hike, the government also imposed a limit of 100 kg on gold imports under the Advance Authorisation scheme. The scheme allows jewellery exporters to import raw or input materials at zero duty. The cap is positioned as another lever to discourage excessive inflows and contain dollar outflow. Together with the higher import tax burden, this adds to policy tightening focused on bullion.

Key numbers at a glance

Market impact: what the numbers imply for trade and bullion

The immediate impact visible in the data is a sharp reduction in reported monthly gold inflows, alongside a sizeable fall in import value from April to May 2026. A lower bullion import bill can ease pressure on foreign exchange reserves, which is one of the stated policy objectives. The demand-side estimates suggest jewellers saw weaker buying soon after the hike, which can affect inventory planning and pricing decisions at the retail end. At the same time, the government source attributed part of the import decline to factors beyond taxation, including high prices and greater recycling, indicating that multiple forces are shaping the market.

Outlook signals: WGC expects demand to soften in 2026

The World Gold Council (WGC) said India’s gold demand is expected to contract by 50-60 tonnes in calendar 2026, about 10% lower than the previous year, following the import duty hike. WGC’s India gold market update also described the 6% to 15% move as the single-largest increase on record and as a full reversal of the July 2024 duty cut. The WGC view supports the idea that the duty change can have a measurable impact on jewellery, bar and coin demand, even as prices and consumer sentiment remain important variables.

Conclusion

India’s decision to raise effective import duty on gold and silver to about 15% from May 13, 2026 has been followed by a sharp moderation in reported monthly gold imports to 25-30 tonnes and a drop in import value to about USD 3.42 billion in May from USD 5.63 billion in April. Industry estimates also point to a steep fall in physical demand in late May. The next official readings on trade and import volumes will be closely watched for confirmation of whether the post-hike slowdown sustains beyond the initial adjustment period.