India has more than doubled tariffs on gold and silver imports in an effort to ease pressure on the country's foreign exchange reserves and shore up the rupee as the Iran war drags on. The Indian government raised the tariff rate from 6% to 15%, comprising a 10% basic customs duty and a 5% tax on gold and silver imports.

Dig deeper: The move comes just days after Prime Minister Narendra Modi appealed to Indians to pause buying gold, avoid foreign travel and reduce fuel consumption. India, the world's second-largest consumer of precious metals, meets almost all of its gold consumption through imports. Gold and silver account for nearly 11% of the country's total imports. The tariff hike could help ease India's trade deficit and shield the rupee, which is among Asia's worst-performing currencies. Foreign investors are also increasingly pulling out of India's stock market, with the latest data showing that 2026 is set to be the worst year for outflows since 1993.

Bigger picture: "While it is difficult to gauge the full impact, key implications could include: an impact on customer demand due to a further rise in gold (to the extent of a duty hike) and concerns about gold smuggling, especially from larger jewelers," Jefferies analysts wrote in a note. "Lower gold imports can indeed help lower current account outflows for India, as gold import outlays are substantial," Vishrut Rana, Asia-Pacific economist at S&P Global Ratings, told CNBC. But he warned that "energy costs are still front and center, and while these are elevated, we expect pressure on the rupee will persist."

Market impact: The rupee was trading at 95.58 to the U.S. dollar (USD:INR) at the time of writing, recovering after notching a record low on Tuesday. The rupee has depreciated 6% against the greenback YTD. India's stock market didn't move much after the tariff news, as higher oil prices and continued foreign outflows offset broader gains. The benchmark Nifty (NIFTY) and Sensex (SENSEX) indices ended 0.1% higher each on Wednesday after four sessions of losses. Gold and silver ETFs rallied as demand for these products could rise with physical imports getting costlier, while shares of Indian jewelers fell.