The Indian government has significantly increased import duties on gold, silver, and platinum as part of efforts to control non-essential imports and safeguard the country’s foreign exchange reserves amid rising geopolitical tensions in West Asia.
Effective May 13, the import duty on gold and silver has been raised from 6 per cent to 15 per cent, while platinum imports will now attract a 15.4 per cent duty. The revised tax structure includes a 10 per cent basic customs duty along with a 5 per cent Agriculture Infrastructure and Development Cess (AIDC).
The move comes shortly after Prime Minister Narendra Modi urged citizens to postpone unnecessary gold purchases, reduce fuel consumption, and avoid avoidable foreign exchange spending during the ongoing global uncertainty.
Higher Prices for Gold Buyers
For consumers, the immediate effect will be a sharp rise in gold prices and more expensive jewellery purchases. Industry estimates suggest that the latest duty hike could increase domestic gold prices by nearly ₹27,000 per 10 grams compared to previous levels.
Industry leaders believe affordability may become a major concern for buyers. The Gems and Jewellery sector fears that rising prices could also encourage illegal gold smuggling and the growth of grey market activities.
Jewellers expect many customers to shift towards purchasing lighter-weight jewellery due to soaring costs.
Jewellery Industry Faces Demand Pressure
India remains the world’s second-largest consumer of gold after China, and the jewellery sector is heavily dependent on imported gold.
With import costs increasing sharply, experts predict a slowdown in overall demand volumes, even though the total value of sales could remain elevated because of higher gold prices.
Industry executives believe the current duty structure may remain in place for an extended period if geopolitical tensions and crude oil prices continue to rise.
The sector is also concerned about the possible return of gold smuggling, which had reduced after India lowered import duties in 2024.
Impact on Investors
The announcement has already triggered a strong rally in domestic bullion prices and gold-linked investment products.
Gold futures on the Multi Commodity Exchange (MCX) crossed ₹1.63 lakh per 10 grams, while silver prices approached ₹3 lakh per kilogram.
Market analysts say that the combination of higher import duties, ongoing conflict in West Asia, rising crude oil prices, and pressure on the Indian rupee could keep bullion prices elevated in the near future.
Many investors continue to view gold as a safe-haven asset during periods of global uncertainty and market volatility.
Why the Government Increased Duties
Government officials described the decision as a preventive measure aimed at protecting India’s macroeconomic stability during extraordinary external conditions.
India’s import bill has surged sharply following the spike in crude oil prices caused by supply disruptions near the Strait of Hormuz due to the West Asia conflict.
Brent crude prices have reportedly climbed from around USD 73 per barrel before the crisis to nearly USD 107 per barrel.
Since India imports nearly 87 per cent of its crude oil requirements, prolonged disruptions could increase inflation, widen the current account deficit, and put additional pressure on the rupee.
Officials said the duty hike is part of a broader strategy to prioritise foreign exchange spending on essential imports such as crude oil, fertilisers, defence equipment, industrial raw materials, and capital goods while discouraging discretionary imports like gold.
