The Centre has capped duty-free gold imports under the advance-authorisation (AA) scheme at a maximum of 100 kg per licence, tightening controls on a channel that officials say has been exploited to divert imported gold into the domestic market rather than for its intended purpose of export-oriented jewellery manufacturing. The move, notified by the Directorate General of Foreign Trade (DGFT), comes amid mounting concern over India's swelling import bill and the pressure it is placing on foreign exchange reserves.

Key Changes Under the Revised Norms

First-time applicants seeking gold import authorisation will now face mandatory physical inspection of their manufacturing facilities by DGFT officials before any licence is granted. This is a significant departure from the earlier, largely document-based verification process.

The government has also introduced an export-performance linkage: firms must fulfil at least 50 per cent of export obligations under earlier licences before they become eligible to apply for fresh authorisations. This effectively closes a loophole that allowed companies to accumulate import permissions without demonstrating commensurate export activity.

Stricter Monitoring and Reporting

Exporters importing gold under the AA scheme must now submit fortnightly performance reports to the DGFT. Regional offices have been directed to relay monthly consolidated updates to headquarters, creating a centralised oversight trail for gold import and export transactions. This is the most granular reporting requirement imposed on the scheme to date.

Customs Duty on Gold and Silver Raised to 15 Per Cent

Separately, the government on Wednesday sharply raised customs duties on gold and silver imports to 15 per cent from the earlier 6 per cent — a near-tripling of the levy. Platinum import duty was revised upward to 15.4 per cent from 6.4 per cent.

The revised structure comprises a 10 per cent basic customs duty and a 5 per cent Agriculture Infrastructure and Development Cess (AIDC). Policymakers framed the hike as a necessary step to contain foreign exchange outflows at a time when rising oil prices — linked to the West Asia conflict — are already straining India's external account.

The Broader Policy Context

The duty revision follows Prime Minister Narendra Modi's appeal earlier this month urging citizens to avoid non-essential gold purchases for a year and embrace austerity to conserve foreign exchange reserves amid global uncertainty tied to the West Asia crisis. The AA-scheme cap and the duty hike together represent a two-pronged approach: restricting the commercial import channel while also dampening retail demand through higher prices.

India is among the world's largest gold consumers, with demand driven by jewellery, investment, and festival purchases. The combined measures are expected to have wide-ranging implications for consumers, jewellers, and bullion traders. Industry bodies are likely to flag concerns about input-cost pressures on the gems and jewellery export sector, which relies heavily on the duty-free import window to remain price-competitive in global markets.

How effectively DGFT's regional offices enforce the new inspection and reporting requirements will determine whether the reforms achieve their stated goal of plugging diversion — or merely add compliance burden without closing the arbitrage gap.