Government considers cutting gold and silver import duties after higher rates fail to curb imports
Quick Look
The Indian government is discussing a reduction in import duties on gold and silver after higher rates failed to curb imports and instead fueled a rise in grey market trade, according to Gems & Jewellery Council chairman Rajesh Rokde.
AI-generated summary
Why It Matters
India raised customs duties on gold and silver from 6% to 15% in May to protect foreign exchange reserves during the West Asia conflict. Despite high duties, gold imports rose in value terms in FY26 due to price increases, while volumes declined slightly.
The government is discussing a possible cut in gold and silver import duties after the higher rates failed to reduce imports and instead contributed to a rise in the grey market, Gems & Jewellery Council chairman Rajesh Rokde told ET Online.
The central government is currently discussing a reduction in import duties on gold and silver after higher rates failed to curb imports, Rajesh Rokde, Chairman of the Gems & Jewellery Council, told ET Online.
The duty isn't proving effective, said Rokde, adding that the jewellery body had warned earlier that this would fuel illegal trade, and that is exactly what is happening.
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“The government might reconsider this policy. The expectation was that imports would drop, but that didn’t happen, and imports remained largely unaffected, while the grey market expanded significantly.”
The government has likely been deliberating on this for a while, and discussions are “certainly” ongoing, though no final decision has been made yet, he stated.
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The government is simply looking for the right window to make a move, Rokde further added.
Centre sharply increased customs duties on gold and silver to 15% from 6% in May, to contain pressure on the country’s foreign exchange reserves and external account during the West Asia conflict.
India, the second-largest consumer of gold after China, roughly imports close to 700 to 900 tonnes of gold annually. According to government data, gold imports in FY26 surged 24% to a record $71.9 billion, even as import volumes fell to 721 tonnes.
Meanwhile, the yellow metal’s prices today dropped by Rs 2,045 to Rs 1,54,236 per 10 grams in futures trade amid a fall in spot demand.
What to Watch
AI outlook — possibilities, not facts
The government will announce a reduction in gold and silver import duties in the coming weeks.
Likely · Within weeks
Open Questions
- When will a final decision on duty reduction be made?
- What specific duty rates are under consideration?
- How will the government balance reserve protection with market demand?
