- The Centre is considering a cut in import duties on gold and silver after the higher levy failed to significantly reduce imports and was instead followed by an expansion in the grey market, Gems and Jewellery Council Chairman Rajesh Rokde told ET Online.
- On May 13, the government raised the import duty on gold and silver to 15% from 6% to curb imports and ease pressure on the country's external account.
- Between May 13 and June 30, agencies registered 287 smuggling cases, seized 160.91 kg of gold, and arrested 116 people.
- From May 13 to August 2, the Centre collected ₹10,463 crore in customs duty from precious metal imports, with gold accounting for ₹10,040 crore.
- In FY26, gold imports surged 24% to a record $71.9 billion despite volumes falling to 721 tonnes.
- The higher duty did not have the desired impact, as imports remained largely unaffected and the grey market expanded significantly.
- According to Rokde, the higher cost of legal supplies made unofficial channels more attractive, leading to an increase in grey market activities.
- The government faces the challenge of controlling imports without encouraging more gold trade through unofficial channels.
- A reduction in import duty could lower the landed cost of gold and narrow the price gap between legal and grey-market supplies.
The Indian government is reconsidering its 15% import duty on gold and silver after it failed to reduce imports and instead fueled the grey market, according to Gems and Jewellery Council Chairman Rajesh Rokde.
The government raised the import duty from 6% to 15% in May to curb bullion imports and ease pressure on the external account.
However, Rokde noted that gold imports remained largely unaffected, with the higher costs of legal supplies making unofficial channels more appealing.8
Government data revealed that India's gold import bill surged 24% to a record $71.9 billion in FY26, despite a decline in import volumes to 721 tons.5
The challenge for the government is to control imports without promoting illegal trade. A reduction in import duty could lower the landed cost of gold, potentially narrowing the price gap between legal and grey-market supplies.9
However, domestic gold rates are influenced by international prices, the rupee-dollar exchange rate, and local market conditions, meaning consumers may not see immediate benefits.
Rokde emphasized that the duty is not proving effective, stating, “The expectation was that imports would drop, but that didn’t happen”.
The Centre collected ₹10,463 crore in customs duty from precious metal imports between May 13 and August 2, with gold accounting for ₹10,040 crore.24
The government is currently engaged in discussions regarding the potential reduction of these duties, although no final decision has been made.
“India's gold import bill rose 24% to a record $71.9 billion in FY26 despite volumes falling to 721 tonnes, highlighting the impact of high international prices. Between May 13 and August 2, customs collected ₹10,463 crore from precious metal imports, while agencies registered 287 smuggling cases and seized 160.91 kg of gold.”
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