Despite the Prime Minister's appeal to reduce gold imports, India's gold imports surged by 34% in May 2026 compared to the same period last year. The increase comes even as the effective import duty on gold remains one of the highest in the world at 18.45%, which includes a 3% Goods and Services Tax (GST).
High Tariffs Fail to Deter Demand
The high tariffs have added significantly to the cost of gold, but Indians' love for the precious metal has hardly been deterred. The surge in imports indicates that demand remains robust, driven by cultural preferences and investment motives.
Effective Duty Among Highest Globally
With the 3% GST, the total import duty on gold in India stands at 18.45%, making it one of the most heavily taxed gold markets in the world. Despite this, the country continues to be a major importer of gold.
The data for May 2026 shows a 34% year-on-year increase in gold imports, highlighting the persistent demand. This trend poses challenges for the government's efforts to curb the current account deficit.
The government has been exploring measures to reduce gold imports, including higher tariffs and awareness campaigns. However, the latest figures suggest that these measures have had limited impact so far.
