Days after Prime Minister Narendra Modi urged citizens to defer gold purchases for a year as part of a broader national effort to conserve foreign exchange, the government on Wednesday sharply increased import duty on precious metals amid concerns over the external sector and the impact of the West Asia crisis on India’s import bill.
A Finance Ministry notification said import duty on gold and silver has been increased to 15 per cent from 6 per cent, while duty on platinum has been raised to 15.4 per cent from 6.4 per cent. Consequential changes have also been made to gold and silver dore, coins and related items, with the revised rates coming into effect from Wednesday.
“This has been done as a policy measure aimed at safeguarding macroeconomic stability, conserving foreign exchange, and moderating non-essential imports during a period of heightened global uncertainty arising from the ongoing West Asia crisis,” an official said.
Officials said customs duties on precious metals have historically been adjusted in line with prevailing macroeconomic and external-sector conditions. In the Union Budget 2024-25, import duties on gold and silver were cut from 15 per cent to 6 per cent and on platinum from 15.4 per cent to 6.4 per cent, reflecting what officials described as a more comfortable external-sector position at the time.
UAE Route
The government has simultaneously tightened the concessional import route available under the India-UAE Comprehensive Economic Partnership Agreement (CEPA), raising the duty on gold imported under the tariff rate quota to 14 per cent from 5 per cent. The move preserves only the existing 1 percentage point preferential margin over the standard duty rate and is aimed at plugging a possible arbitrage route after the sharp increase in headline customs duty.
The tightening comes amid growing concern over rising gold imports routed through Dubai. According to an analysis by the Global Trade Research Initiative (GTRI), India’s gold bar imports from the UAE surged to $16.5 billion in 2025 from $2.9 billion in 2022, while the UAE’s share in India’s gold imports rose to 28 per cent from 7.9 per cent during the same period.
Officials said the latest duty increase forms part of a broader strategy to conserve foreign exchange and prioritise essential imports such as crude oil, fertilisers, industrial raw materials, defence equipment and capital goods amid global uncertainty and the risk of a widening current account deficit (CAD).
Demand impact
Economists said the higher tariffs could moderate gold demand and offer some relief to the CAD, though part of the gains may be offset by smuggling.
Chief Economist at CareEdge Rajani Sinha said a cumulative 9 percentage point increase in duty could reduce gold demand by 50-60 tonnes annually, lowering imports worth $6-9 billion at current international prices.
Debopam Chaudhuri, Chief Economist at Piramal Group, estimated the move could save nearly $2.5 billion, or about ₹23,750 crore (at INR-USD rate of 95), in FY27 if the tariff hike is fully passed on to consumers.
(With inputs from Amiti Sen)
Published on May 13, 2026