India’s Gold Imports Surge 34% Despite Duty Hike to 15%, June 17

India’s government raised import duties on gold and silver to 15% from 6% on May 13 to reduce the trade deficit and ease pressure on the rupee. Gold imports fell 39% month-on-month to $3.42 billion in May but remained 34% higher than May 2025. Silver imports collapsed 87% to $75.57 million. The mixed results show demand for gold remains resilient despite higher taxes.

Gold Demand Proves Resilient After Duty Hike

Gold imports to India fell 39% from April to May after the duty increase took effect, dropping to $3.42 billion from $5.63 billion. However, year-over-year, May imports were still 34% higher than May 2025. During April-May combined, gold imports surged 60% to $9.04 billion compared with the same period last year.

Barclays economists noted that while the higher duty will dampen import volumes over time, gold prices remain elevated globally, keeping import values high. Switzerland supplied 40% of India’s gold imports, followed by the United Arab Emirates at 16% and South Africa at 10%.

Silver Imports Collapse Under New Restrictions

Silver imports fell 82% month-on-month to $75.57 million in May and dropped 87% year-over-year. Import volumes fell 94% to just 33 metric tons, the lowest since February 2023. The government restricted nearly all silver forms and later extended curbs to grain and powder, requiring import permits for most transactions.

For April-May combined, silver imports declined 33% to $486.58 million. The sharp drop in silver threatens to weigh on global silver prices, though it helps India reduce its trade deficit.

Global Gold Rally Amid Geopolitical Easing

Spot gold rose 0.6% to $4,334.06 per ounce, extending gains for a fourth straight session to a one-week high, after the US and Iran signed a preliminary deal to end the Persian Gulf war and reopen the Strait of Hormuz. US gold futures for August delivery added 0.1% to $4,355. The rally rests partly on a softer dollar, which made gold cheaper for buyers outside the US.

A record 45% of central-bank reserve managers plan to add gold over the next 12 months, citing crisis performance as the reason. In India, 24K gold prices stood at Rs 15,154 per gram, while 22K gold was priced at Rs 13,891 per gram.

Why the Policy Has Limits

India’s appetite for gold remains difficult to restrain through taxation alone, according to the Global Trade Research Initiative. Importers rushed to buy before the May 13 duty increase, creating a surge in April. Even after the higher duty took effect, demand from jewellers, investors, and industries kept imports elevated in value terms due to high global gold prices.

Final Thoughts

India’s duty hike slowed gold imports month-on-month but failed to reduce year-over-year demand, while silver imports crashed 87%. The policy shows limited power to curb gold imports when global prices stay high and demand remains strong.

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