India Increases Import Duty on Gold and Silver to 15%

New Delhi. The Indian government has increased the customs duty on the import of gold and silver from 6 percent to 15 percent. According to a government order issued on Tuesday, this decision has been taken to reduce the growing trade deficit and to prevent the weakening Indian rupee from further decline.

The government has imposed a 10 percent basic customs duty and a 5 percent Agriculture Infrastructure and Development Cess. Thus, the total effective tax has reached 15 percent. Earlier, the tax was reduced to 6 percent around mid-2024.

The government has taken this step to reduce the pressure on foreign exchange reserves and to reduce gold imports. India is the world's second-largest gold consumer nation and imports about 99 percent of its gold needs from abroad. Gold alone accounts for 9 percent of the total import expenditure.

Traders have expressed concern that gold smuggling may increase with the increase in tax. Earlier, smuggling had decreased when the tax was reduced, but the current increase may encourage illegal trade. Besides, it is estimated that the demand in the market will also decrease when the price of gold increases.

Recently, Prime Minister Narendra Modi had also urged the countrymen not to buy gold for a year. He appealed not to buy gold jewelry for events at home, saying that saving foreign exchange is patriotism now. After Modi's appeal, the share prices of major jewelry companies in India like Titan, Kalyan Jewellers, and Senco Gold had fallen by up to 10 percent.