Bullion traders and jewellers seek a reduction to 6 per cent, arguing that lower duties could support formal import
The central government is examining a possible reduction in import duties on gold and silver amid concerns that higher taxes may be pushing precious metal imports towards unofficial channels, according to media reports.
While there is no decision yet on a duty cut, some sections of the government are assessing whether lowering the levy could make formal imports more attractive and reduce the incentive to smuggle gold, the report said.
Bullion traders and jewellers have sought a reduction in the duty to 6 per cent from the current 15 per cent, according to the report.
The government raised the duty on gold and silver on 13 May 2026 to curb imports and conserve the country’s foreign exchange reserves. Industry representatives have argued that a lower duty could narrow the price gap between gold imported through official channels and the metal brought into the country through unofficial routes. They believe this could improve the competitiveness of legitimate imports and reduce the incentive for smuggling.
India is among the world’s largest gold importers, bringing in around 700-800 tonne of the precious metal annually. The country also exports gold jewellery to markets including the UAE, Thailand and Singapore.
Imports Rise Before Duty Hike
Gold imports surged nearly 82 per cent year-on-year in April 2026, prompting concerns over the impact of higher imports on India’s foreign exchange reserves and current account deficit (CAD). A rise in gold imports can increase pressure on the rupee by raising demand for foreign currency. The rupee had already depreciated more than 6 per cent against the US dollar by mid-May, adding to concerns around foreign exchange outflows.
Gold imports increased nearly 34 per cent in May, although the higher duty was applicable for only around half of the month. During the first two full months after the duty increase, imports rose 5.5 per cent to USD 6.13 billion in June and July, compared with USD 5.81 billion during the corresponding period a year earlier.
Report said the higher duty had contributed to a significant increase in gold smuggling. The representative said that while the government sought to conserve dollar reserves, a substantial outflow had instead moved through the parallel economy, with the tax change primarily affecting the channel through which gold entered the country.
Silver, Platinum Also In Focus
The government is also understood to be examining the impact of higher duties on silver and platinum, with discussions reportedly extending to import duties across precious metals, according to the report.
However, the timing, scope and extent of any potential revision remain uncertain.
Silver and platinum have significant industrial applications in addition to investment demand. Silver is widely used in solar energy and electronics manufacturing, while platinum is used in the automotive and healthcare sectors.
Industry participants have therefore argued that although higher duties can help contain foreign exchange outflows, they can also increase the cost of industrial inputs and add to cost pressures across sectors.
