India Increases Gold, Silver Tariffs To 15% to Curb Imports, Support Rupee

India has sharply increased import duties on gold and silver from 6 per cent to 15 per cent in a bid to reduce inflows of precious metals and safeguard the country's foreign exchange reserves amid mounting global economic uncertainty, Reuters reported.

According to a Reuters report, the move comes at a time when the government is grappling with rising crude oil prices, geopolitical instability in the Middle East, and pressure on the rupee, which has been among Asia's weaker-performing currencies in recent months. Officials believe the higher tariffs could discourage demand for bullion in the world's second-largest consumer market for precious metals and help narrow India's widening trade deficit.

The decision follows Prime Minister Narendra Modi's recent appeal urging Indians to avoid non-essential gold purchases for a year, including buying jewellery for weddings and celebrations. The Prime Minister argued that limiting gold imports was in the national interest as the country seeks to preserve foreign exchange reserves during a period of heightened economic strain.

Gold imports are particularly sensitive for India because purchases are largely settled in US dollars. With energy imports already exerting pressure on reserves, policymakers appear keen to reduce additional outflows linked to bullion demand. Economists say the increase in import duties is intended not only to reduce consumption but also to improve the country's external balance at a time when global financial conditions remain volatile.

India's trade deficit has remained a persistent concern because the country imports substantial quantities of crude oil, electronics and precious metals. A higher import bill can widen the deficit, increase dependence on foreign capital inflows and leave the economy more vulnerable to external shocks. By making imported gold and silver more expensive, the government hopes to moderate demand and ease pressure on the current account.

Recent data suggest the strategy may already be having an effect. Gold imports in April reportedly dropped to near three-decade lows before banks resumed purchases, reflecting weaker buying interest after the government signalled its tougher stance on bullion imports.

The Global Trade Research Initiative (GTRI) has backed the government's position, warning that surging bullion imports are placing severe strain on India's external finances. In a recent report, the think tank noted that India's gold bar imports had risen dramatically from 36.5 billion US dollars in 2022 to 58.9 billion US dollars in 2025. It also pointed to the growing role of imports from the United Arab Emirates in driving the increase.

GTRI further urged the government to reassess tariff concessions granted under the India-UAE free trade agreement, arguing that lower duties on precious metals entering from Dubai had significantly contributed to the recent surge in imports.

Industry experts, meanwhile, have suggested that long-term solutions should focus on mobilising idle domestic gold through recycling and monetisation schemes rather than relying solely on higher import duties.

Union Minister Ashwini Vaishnaw has also echoed the Prime Minister's call for restraint in import-related spending. Speaking at the CII Annual Business Summit 2026 in New Delhi, he said conserving foreign exchange reserves had become increasingly important as instability in the Middle East continued to disrupt global markets and threaten energy supply routes through the Strait of Hormuz.