India's gold imports have plummeted by nearly 70 percent to 25-30 tonnes after the government more than doubled the customs duty on the yellow metal to 15 percent, according to a senior Finance Ministry official.
Sharp Decline in Imports
Following a month-long increase in import duties, gold imports dropped from 75-100 tonnes to 25-30 tonnes. The decline comes after Prime Minister Narendra Modi's call to curb gold purchases and implement austerity measures to reduce unnecessary foreign exchange spending.
Previous Import Trends
Despite the recent slump, India's gold imports in May 2026 rose 34 percent year-on-year to USD 3.41 billion, driven by higher precious metal prices. In the first two months of fiscal 2026-2027 (April-May), gold imports surged 60.14 percent to USD 9.04 billion.
In the entire fiscal year 2025-2026, gold imports hit an all-time high of USD 71.98 billion, up 24 percent, though volume-wise they fell 4.76 percent to 721.03 tonnes.
Rationale Behind Duty Hike
India is the world's second-largest gold consumer after China, with demand largely driven by the jewelry industry. Gold imports cause a significant outflow of foreign exchange, accounting for over 5 percent of the country's total imports.
The government aims to prioritize foreign exchange spending on essentials such as crude oil, fertilizers, industrial raw materials, and capital goods that directly support economic activity and food security, especially given uncertainties in West Asia that could inflate the import bill.
Call for Gold Monetisation
On June 3, Shamika Ravi, a member of the Economic Advisory Council to the Prime Minister (EAC-PM), suggested that India should expand gold monetisation beyond traditional gold loans. Developing more financial instruments linked to gold could reduce dependence on imports and ease pressure on foreign exchange reserves.
