The Indian government on Wednesday raised import tariffs on gold and silver to 15% from the previous 6%, according to official orders. This decisive measure aims to curb imports of precious metals and alleviate pressure on the country's foreign exchange reserves.
Sharp Tariff Hike Follows PM Modi's Appeal
The significant increase in duties comes shortly after Prime Minister Narendra Modi urged Indians to refrain from purchasing gold for one year in the national interest. This appeal was made amid rising economic strains linked to the ongoing Middle East conflict.
Economists anticipate that the higher tariffs will dampen demand in India, the world's second-largest consumer of precious metals. The move is expected to help narrow the trade deficit and support the rupee, which has been one of Asia's weakest-performing currencies in recent months.
Concerns Over Gold Imports and Forex Reserves
The tariff hike follows growing government concerns over the rapid surge in gold imports and their impact on India's foreign exchange reserves and trade balance. Earlier this week, PM Modi appealed to citizens to defer non-essential gold purchases, including wedding-related buying, for one year.
Supporting the Prime Minister's remarks, the Global Trade Research Initiative (GTRI) stated that rising bullion imports are placing severe pressure on India's external finances. In a report, the think tank said, "GTRI has supported Prime Minister Narendra Modi's appeal asking Indians to avoid buying gold for a year as rising bullion imports are hurting India's foreign exchange reserves and trade balance."
GTRI Data and FTA Review Call
According to GTRI data, India's gold bar imports rose from $36.5 billion in 2022 to $58.9 billion in 2025, with imports from the UAE accounting for an increasing share. The think tank also urged the government to review tariff concessions granted under the India-UAE free trade agreement.
"At the same time, GTRI has urged the government to review its FTA policies, especially tariff concessions on precious metal offered to Dubai under the India-UAE trade deal, which it says have significantly contributed to the recent surge in gold imports," the report added.
Union Minister Echoes Appeal
Union Minister Ashwini Vaishnaw echoed PM Modi's appeal during the CII Annual Business Summit 2026 in New Delhi, urging citizens to reduce import-related spending to conserve foreign exchange reserves. He emphasized that the appeal had become more urgent as instability in the Middle East continues to affect the global economy and energy flows through the Strait of Hormuz.
