India has increased import duties on gold and silver from 6% to 15%, comprising a 10% basic customs duty and a 5% tax, following Prime Minister Narendra Modi's call for citizens to reduce bullion purchases.
This decision comes as India's gold imports surged to an average of 83 tonnes monthly in early 2026, up from 53 tonnes in 2025, driven by strong investment demand that nearly doubled the value of gold demand to a record $25 billion in the first quarter of 2026.
The rising demand for gold has contributed to a growing import bill, exacerbated by high global energy prices and geopolitical tensions in the Middle East. India, which has a significant trade deficit exceeding $330 billion for the financial year ending March 2026, imports about 85% of its fuel needs, making it vulnerable to fluctuations in energy costs.
Analysts, including Vishrut Rana from S&P Global Ratings, suggest that reducing gold imports could alleviate some current account pressures, but the persistent high energy costs will continue to strain the rupee. Trinh Nguyen from Natixis noted that the government's actions signal a retreat from market liberalization, which could concern investors.
Modi's recent appeals for fuel conservation further highlight the government's strategy to manage rising energy costs amid a backdrop of increasing economic challenges