India aims to reduce its $50 billion annual gold imports via ETFs by shifting demand to financial products and recycling domestic gold. Three reforms are proposed: allowing ETFs to hold financial gold, removing capital gains tax on gold held over two years, and incentivizing importers to borrow domestic gold.
India has imposed restrictions on duty-free gold imports under the advance authorisation scheme, capping imports at 100kg per licence and requiring 50% export obligation fulfilment, to prevent misuse and support the rupee amid record high imports.
India's 15% customs duty hike on gold imports may increase domestic prices, divert supplies to unofficial channels, and impact the current account deficit (CAD), though gold's role as the sole CAD driver is debated.
India’s gold imports hit a record $71.98 billion in 2025-26, rising over 24% from $58 billion a year earlier. This was largely due to skyrocketing global gold prices, which have bumped up the value of imported gold.
Prime Minister Modi urged Indians to halt gold purchases for a year to protect foreign exchange reserves, a call supported by GTRI which highlighted a surge in gold imports straining the trade balance. Union Minister Ashwini Vaishnaw echoed the appeal, emphasizing reduced import spending amid Middle East conflict, leading to a sell-off in jewellery stocks.
