Gold Export Council Warns Of Smuggling Risk Due To Higher Import Taxes

While the government has raised import taxes on gold and silver to curb the outflow of foreign exchange, experts have expressed concerns that the decision may not work as expected.

Instead, higher import duties on the precious metals could increase the chances of smuggling.

According to the Gem & Jewellery Export Promotion Council (GJEPC), the government’s decision to raise import duties will not help reduce imports and will instead inflate prices, news agency Press Trust of India reported.

The council has urged the government to hold discussions with all stakeholders to reach a sustainable solution to the crisis.

“Hiking import duties rarely curbs gold imports; it merely inflates prices. Despite gold prices doubling recently, imports have not declined proportionally,” the council said, according to the report.

The council said higher import taxes lead to increased gold smuggling. It also makes exports of the precious metal more expensive.

It said exporters of precious metals will now face increased bank guarantees of Rs 28-30 lakh per kg of duty-free gold sourced from nominated agencies.

This condition will hamper the working capital availability of exporters.

The council also warned about the impact of the latest decision on MSME (micro, small, and medium enterprises) manufacturers.

MSME units account for 80 per cent of the council’s total members.

The government on Tuesday raised the basic customs duty on gold to 10 per cent from 5 per cent and the Agriculture Infrastructure and Development Cess to 5 per cent from 1 per cent.

The decision came days after Prime Minister Narendra Modi urged citizens to stop buying gold for a year in order to save foreign exchange for purchasing more critical commodities such as fuel and fertiliser.

India’s gold imports surged more than 24 per cent to an all-time high of $71.98 billion in 2025-26.

Gold is among the biggest contributors to India’s import bill.