Gold, silver import duty hiked to 15% to ease forex pressure
Synopsis
India has more than doubled the import duty on gold and silver to 15%, pairing a fiscal lever with PM Modi's earlier appeal for citizen austerity — a rare dual-track response to forex pressure. Gold ETF inflows surged 34% to ₹3,040 crore in April even as the hike loomed, underscoring how difficult it may be to dampen India's structural appetite for the yellow metal.
Key Takeaways
The government raised gold and silver import duty to 15% from 6% on 13 May 2025 .
The revised structure combines a 10% basic customs duty and a 5% AIDC on precious metal imports.
Platinum import duty was also raised, from 6.4% to 15.4% .
PM Modi had earlier urged citizens to avoid non-essential gold purchases for a year to conserve foreign exchange.
Gold ETF inflows jumped 34% month-on-month to ₹3,040 crore in April, per AMFI data.
Silver ETFs recorded a ₹126 crore outflow in April — the third consecutive month of withdrawals.
The Indian government on Wednesday, 13 May raised customs duties on gold and silver imports to 15% from 6%, as policymakers move to contain mounting pressure on India's foreign exchange reserves amid the ongoing West Asia conflict. The revised duty on platinum imports has also been increased, from 6.4% to 15.4%.
Revised Duty Structure
Under the updated framework, gold and silver imports will attract a 10% basic customs duty combined with a 5% Agriculture Infrastructure and Development Cess (AIDC), bringing the effective import tax to 15%. The structural change signals a deliberate policy shift aimed at curbing non-essential foreign exchange outflows, with precious metals identified as a key contributor to India's elevated import bill.
Why the Government Acted Now
The duty hike comes against the backdrop of sustained pressure on India's external account. Earlier this month, Prime Minister Narendra Modi publicly urged citizens to avoid non-essential gold purchases for at least one year and adopt broader austerity measures to conserve foreign exchange reserves amid global uncertainty linked to the West Asia crisis. The duty revision operationalises that appeal through a fiscal instrument, making imports costlier and less attractive to bulk buyers and traders. This comes amid a period when India's foreign exchange reserves have faced headwinds from multiple fronts, including elevated energy import costs.
India's Gold Demand and Market Context
India is among the world's largest consumers of gold, with demand historically driven by jewellery, investment, and festival-related purchases. The duty hike is expected to dampen inbound shipments in the near term, though analysts note that domestic demand for gold tends to be structurally resilient, particularly ahead of the wedding and festive season. Notably, inflows into gold exchange-traded funds (ETFs) surged in April, reflecting continued investor appetite for the metal despite the prospect of higher import costs. According to data from the Association of Mutual Funds in India (AMFI), gold ETF inflows jumped 34% month-on-month to ₹3,040 crore in April, compared with ₹2,265 crore in March.
Silver ETFs See Continued Outflows
In contrast, silver ETFs continued to witness sustained outflows, marking the third consecutive month of withdrawals. AMFI data showed silver ETFs recorded an outflow of ₹126 crore in April, following outflows of ₹683 crore in March and ₹826 crore in February. The divergence between gold and silver investor behaviour suggests that while gold retains its safe-haven appeal, silver is losing traction as a retail investment vehicle in the current environment.
What Happens Next
The higher duty is expected to discourage large-scale precious metal shipments and support macroeconomic stability in the medium term. Industry bodies representing jewellers and bullion traders are likely to assess the impact on retail pricing and consumer demand. With global uncertainty persisting, further policy measures to manage the external account cannot be ruled out.
Point of View
Most notably in 2013, when a duty hike to 10% was paired with the 80:20 rule to stem a current account crisis. The difference this time is the explicit political framing: Modi's public appeal for austerity before the fiscal measure arrived is unusual and signals that the forex pressure is being treated as a national-interest issue, not merely a technical one. The risk is that higher duties push demand toward unofficial channels, as happened in 2013-14, ultimately undermining the forex objective. Whether the government has a parallel enforcement strategy for grey-market gold flows will determine whether this hike achieves its macroeconomic goal or merely reshapes where the demand is met.
NationPress
31 Jul 2026
Frequently Asked Questions
Why has India hiked the import duty on gold and silver?
The government raised the import duty on gold and silver to 15% from 6% to reduce foreign exchange outflows and ease pressure on India's external account amid the ongoing West Asia conflict. Precious metals are among the largest contributors to India's import bill.
What is the new import duty structure for gold and silver?
The revised structure imposes a 10% basic customs duty plus a 5% Agriculture Infrastructure and Development Cess (AIDC), bringing the effective import tax to 15%. Platinum imports now attract a duty of 15.4%, up from 6.4%.
How have gold ETF inflows been affected?
Despite the duty hike, gold ETF inflows surged 34% month-on-month to ₹3,040 crore in April 2025, compared with ₹2,265 crore in March, according to AMFI data, reflecting sustained investor appetite for gold.
What is happening with silver ETFs?
Silver ETFs have seen three consecutive months of outflows. AMFI data showed a ₹126 crore outflow in April, following ₹683 crore in March and ₹826 crore in February, indicating waning retail interest in silver as an investment.
What did PM Modi say about gold purchases?
Earlier in May, Prime Minister Narendra Modi urged citizens to refrain from non-essential gold purchases for one year and adopt austerity measures to help conserve India's foreign exchange reserves amid global uncertainty linked to the West Asia crisis.
