The Indian government on Wednesday increased import tariffs on gold and silver to 15 percent from the previous 6 percent, according to Reuters. This decision is intended to reduce precious metal imports and alleviate pressure on the country's foreign exchange reserves.
Timing and Context of the Tariff Hike
The sharp rise in duties comes shortly after Prime Minister Narendra Modi urged Indians to refrain from buying gold for one year in the national interest, amid growing economic pressures linked to the ongoing Middle East conflict. The higher tariffs are expected to dampen demand in India, the world's second-largest consumer of precious metals. Economists suggest that this move could help narrow India's trade deficit and support the rupee, which has been one of Asia's weakest-performing currencies in recent months.
Government Concerns and Support for PM's Appeal
The tariff hike follows increasing concerns within the government over the rapid rise 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 were 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."
Data on Gold Imports and FTA Concerns
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 United Arab Emirates accounting for an increasing share. The think tank also urged the government to review tariff concessions granted under the India-UAE free trade agreement. The report added, "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."
Union Minister's Endorsement
Union Minister Ashwini Vaishnaw also 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 continued to affect the global economy and energy flows through the Strait of Hormuz.
