The Government of India has increased the import duty on gold and silver from 6 percent to 15 percent, effective 13 May. The move aims to curb non-essential imports, conserve foreign exchange reserves, and address the rising import bill amid ongoing geopolitical tensions in West Asia. The revised duty structure includes a 10 percent basic customs duty and a 5 percent Agriculture Infrastructure and Development Cess, raising the effective rate to 15 percent for both metals.According to The Hindu, the government’s decision is intended to narrow the trade deficit and support the rupee, which has been under pressure as one of Asia’s worst-performing currencies. The policy is also expected to moderate demand for gold and silver, especially as prices have remained elevated in recent months.As reported by Financial Express, the new rates apply to a wide range of products, including precious metals, jewellery components, and certain industrial-use imports. The notification was issued late on 12 May, with the revised duties coming into effect from midnight. The move follows a period of volatility in global markets and a sharp sell-off in Indian equities.As highlighted by Hindustan Times, the decision comes days after Prime Minister Narendra Modi urged citizens to defer gold purchases for a year and adopt austerity measures to conserve foreign exchange. The government has stated that the measure is a calibrated response to heightened global uncertainty and is designed to prioritise essential imports such as crude oil and fertilisers over discretionary items like precious metals.“The policy measure aimed at safeguarding macroeconomic stability, conserving foreign exchange, and moderating non-essential imports during a period of heightened global uncertainty arising from the ongoing West Asia crisis,” a government official said, as cited in the coverage.As noted in an article by undefined, India’s gold imports reached a record high of USD 71.98 billion in 2025-26, even as the volume of shipments declined. The rupee hit a record low of 95.63 against the US dollar on 12 May, intensifying concerns over the balance of payments and prompting the government to act.As recent developments indicated, the higher duties could dampen demand in the world’s second-largest consumer of precious metals. Industry officials have warned that increased import taxes may revive smuggling, which had previously declined after tariffs were reduced in mid-2024.Market reactions were immediate as gold and silver prices surged nearly 6 percent on the MCX. Jewellery industry executives expect a 10-15 percent reduction in gold imports, with some anticipating a shift in consumer behaviour towards exchanging old gold for new purchases.“Despite elevated duties, companies remain confident of achieving their FY27 value growth guidance of 20-25 per cent, while industry participants are preparing for at least a year of high import duties on gold,” an industry executive stated.Policy analysis showed that India’s reliance on imported gold has repeatedly emerged as a macroeconomic concern, especially during external shocks. Experts note that import duty adjustments have sometimes led to increased smuggling and trade diversions through countries with preferential tariff structures.Further, industry feedback confirmed that the government’s imposition of a 3 percent integrated goods and services tax (IGST) on gold and silver imports had already prompted banks to halt imports for over a month. Imports fell to a near 30-year low in April, and are expected to decline further following the duty hike.Note: This article is produced using AI-assisted tools and is based on publicly available information. It has been reviewed by The Quint's editorial team before publishing.