BIG Gold Price Alert! Centre Raises Gold, Silver Import Tariffs | How Will It Impact You?

The central government has hiked import tariffs on gold and silver to 15% from 6%, Reuters reported on Wednesday, May 13. The increase in import tariffs on the precious metals comes as one of the measures to cut gold imports and curb the current account deficit (CAD). The move is also likely to support the Indian currency, which has been hitting fresh all-time lows almost every week.

The higher duties can put pressure on gold and silver jewellery prices in the domestic market and even dampen demand in the world's second-largest consumer of precious metals. The central government's move has come days after Prime Minister Narendra Modi urged Indians to avoid buying gold for nearly a year. The move may also support the rupee, which is one of Asia's worst-performing currencies, Reuters reported.

Rising Import Tariffs on Gold Can Revive Smuggling

The measure could be counterproductive as higher import taxes could revive gold smuggling which had eased after India slashed tariffs in 2024, as per industry officials. "As expected, the government has raised ​duties to curb the current account deficit. However, this could affect demand, as gold and silver prices were already elevated," Reuters quoted Surendra Mehta, national secretary at the India Bullion and Jewellers Association.

How Much Import Tariff Has Been Hiked?

The government has imposed a 10% basic customs duty and an additional 5% Agricultural Infrastructure adn Development Cess (AIDC) on gold and silver imports. With this, the total import tax on the precious metals increased from 15% to 6%.

"Grey markets are likely to become active, as the incentives to bring in gold illegally are ⁠high. At ​current price levels, smugglers could make significant profits," Reuters quoted ​a Mumbai-based bullion dealer at a private bank, who declined to be named as he was not authorised to speak ​to media.

PM Modi Urges Indians To Avoid Gold Purchases

Prime Minister Narendra Modi on ​Sunday urged people to avoid gold purchases for a year to help protect foreign exchange ​reserves. India meets almost all of its gold consumption through imports.

"A huge amount of the country's money also goes abroad on gold imports. Therefore, I would urge all of you, my fellow countrymen, to postpone the purchase of gold until the situation returns to normal. Today, the need of the hour is that we turn "Vocal for Local" into a people's movement. Instead of foreign goods, adopt local products. Empower the entrepreneurs of your village, your city, your country," PM Modi said at an event.