Gold Import Duty Cut Under Govt Review As Smuggling Concerns Rise: Report
The Centre is considering whether to reduce import duties on gold and silver amid concerns that high taxes may be encouraging smuggling and unofficial imports. Industry groups are seeking a cut in the gold duty from 15% to 6%. The government is assessing the impact on forex reserves, imports and domestic industries
The central government is examining whether import duties on gold and silver should be reduced amid concerns that higher taxes are encouraging imports through unofficial channels, according to sources cited by Moneycontrol.
No decision has been taken so far, but officials are assessing whether lower duties could make legal imports more attractive and reduce incentives for smuggling.
Bullion traders and jewellers have reportedly urged the government to bring the gold import duty down to 6% from the current 15%. The duty was increased on May 13, 2026, as part of efforts to curb gold imports, conserve foreign exchange reserves and limit pressure on the current account.
High duties fuel smuggling concerns
India imports around 700-800 tonnes of gold annually, making it one of the world's largest gold markets. Before the duty increase, gold imports had surged nearly 82% year-on-year in April 2026, raising concerns over foreign exchange outflows and the current account deficit.
Imports increased nearly 34% in May, despite the higher duty applying for only part of the month. During June and July, gold imports rose about 5.5% to $6.13 billion compared with $5.81 billion in the corresponding period a year earlier.
Industry representatives argue that the higher tax has widened the price difference between legally imported gold and smuggled supplies. They contend that this could shift a portion of demand towards the parallel market rather than actually reducing overall imports.
Silver and platinum also under review
The government is also looking at import duties on other precious metals, including silver and platinum, although the timing and extent of any changes remain unclear.
Higher duties can protect foreign exchange reserves by discouraging imports, but they may also increase costs for industries that depend on these metals. Silver is widely used in solar panels and electronics, while platinum has applications in automobiles and healthcare.
The government is therefore weighing the trade-off between conserving foreign exchange and reducing the economic impact of elevated import costs.
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