Highlights 

• Gold import duty was raised sharply by 9%– from 6% to 15%, the steepest increase on record – alongside broader regulatory tightening
• Domestic gold prices have not yet fully reflected the duty hike amid weak demand and ample supply; local markets are currently in deep discount from the landed price
• Past trends indicate that higher duty increases unofficial inflows, although official imports remain relatively resilient
• Gold demand is expected to moderate in 2026, with jewellery and bar and coin demand projected to decline by 50–60t (~10% y/y) on account of the import duty hike.

Policy actions on gold imports

Since early April, the government has adopted a series of measures aimed at moderating gold imports. These have been part of a broader push to conserve foreign exchange reserves amid geopolitical uncertainty and mounting pressure on the INR, which has depreciated by more than 7% y-t-d. These measures include price-based actions, administrative and regulatory tightening, and consumer-directed messaging. While noteworthy, they are not unprecedented; gold is among the top five imports for India, accounting for 8% of the country’s merchandise imports in 2025, and similar measures have been utilised in the past.

On the price front, the gold import duty was raised sharply from 6% to 15%, making it the single largest increase on record and fully reversing the duty cut of July 2024. Rules were also tightened for gold imports linked to exports (under the advance authorisation scheme), and the Prime Minister has directly appealed to consumers, urging them to avoid buying gold for a year.