The Centre’s decision to sharply increase import duty on gold and silver is expected to directly affect jewellery buyers, bullion traders and even household buying patterns ahead of the festive and wedding season. The move comes days after Prime Minister Narendra Modi appealed to citizens to avoid buying gold for a year as India looks to reduce pressure on foreign exchange reserves amid global uncertainty.
From May 13, the effective import duty on gold has been increased from 6 per cent to 15 per cent through Customs Notification No. 16/2026 issued by the Ministry of Finance. While the government sees the step as an economic safeguard, buyers may soon feel the impact in jewellery showrooms across the country.
What Gold import duty hike means for your next jewellery purchase
The biggest immediate effect of the duty hike is likely to be higher gold prices at the retail level.
Gold imported into India will now attract 10 per cent Basic Customs Duty (BCD) and 5 per cent Agriculture Infrastructure and Development Cess (AIDC), compared to the earlier 5 per cent and 1 per cent respectively.
| Component | Earlier | Now |
|---|---|---|
| Basic Customs Duty | 5% | 10% |
| AIDC | 1% | 5% |
| Effective Import Duty | 6% | 15% |
Today, the 24K gold prices in India are around Rs 15,475 per gram, while silver prices range between Rs 2.78 lakh and Rs 2.90 lakh per kilogram.
| Scenario | Duty Rate | Duty Amount on Rs 1,54,750 | Landed Value After Duty |
|---|---|---|---|
| Earlier structure | 6% | Rs 9,285 | Rs 1,64,035 |
| New structure | 15% | Rs 23,212 | Rs 1,77,962 |
The final retail price can climb even further after adding GST, jeweller margins and making charges.
For buyers, this could mean:
- Paying significantly more for new jewellery
- Delaying wedding or festive purchases
- Opting for lighter jewellery designs
- Exchanging old ornaments instead of buying fresh gold
- Turning towards digital gold or gold ETFs
The decision suggests the government is trying to discourage both investment-driven buying and ceremonial purchases through a mix of public messaging and higher pricing.
Why the government raised import duty on gold
India imports almost all the gold consumed in the country, and these imports are paid for in US dollars. In 2025-26, India reportedly spent a record $71.98 billion on gold imports, with the metal accounting for nearly 9-10 per cent of the country’s total import bill.
At the same time, global tensions linked to the Iran war and rising crude oil prices have increased pressure on India’s forex reserves. The concern is that a prolonged period of global instability could widen the current account deficit further.
Also Read: India raises gold import duty back to 15%: What’s behind the move
The government’s calculation appears simple: lower gold imports could help save dollars. Estimates mentioned in the report suggest that a 30-40 per cent drop in gold imports could potentially save India $20-25 billion annually.
The move signals a broader push towards recycling and domestic recovery instead of relying entirely on imported gold.
Bullion traders warn of smuggling risks
The sharp increase in import duty has also raised concerns within the bullion industry. Jeweller association has warned that illegal gold inflows reduced after tariff cuts introduced in 2024. However, traders fear that a 15 per cent duty could once again make smuggling profitable.
Industry players fear that the sharp increase in import duty could once again make illegal gold trade profitable. According to the report, smuggling activity had reduced after tariff cuts in 2024, but the new 15 per cent duty may reopen illegal routes through neighbouring countries. Traders also fear a rise in cash-based transactions, while enforcement agencies such as customs authorities and the Directorate of Revenue Intelligence could face fresh pressure in tracking illegal inflows.
Jewellers and traders worries
Jewellers and bullion traders are also preparing for slower business in the short term. The report points to expectations of lower customer footfalls as rising prices may discourage fresh purchases. Dealers may also face higher inventory costs and increased working capital pressure because imported gold will now become significantly more expensive. In addition, jewellery findings will now attract revised duties between 5 per cent and 5.4 per cent, adding to operational costs for the industry.
Even as some trade groups worry about business losses, others have publicly backed the Prime Minister’s appeal in the interest of reducing pressure on India’s economy.
The broader message from the government is clear: India wants to cut dependence on imported gold and conserve foreign exchange during a period of global economic stress.
