India’s Ministry of Finance has increased import duties on gold and other precious metals to approximately 15%, with the new rate taking effect on May 13, 2026. The basic import tax rose from around 5% to 10%, and when combined with the Agriculture Infrastructure and Development Cess (AIDC), the total levy reaches about 15%. This policy aims to curb non-essential imports and reduce the current account deficit, as precious metals are a major contributor to India’s trade imbalance.
ING reports that the tariff hike is already weighing on domestic demand. Analysts at the Dutch bank estimate that annual gold imports could fall by as much as 100 tonnes, a substantial drop for the world’s second-largest gold consumer. Indian buyers are highly price-sensitive, and the higher tax makes gold more expensive locally, potentially pushing jewelers toward recycled or lower-carat alternatives. The report warns that this could introduce a price ceiling in the physical gold market, especially with global bullion already elevated due to central bank buying and geopolitical uncertainty.
Prime Minister Narendra Modi has also urged citizens to reduce fuel consumption, reflecting a broader strategy to shield India’s economy from volatile global energy prices. As the world’s third-largest oil importer, India is taking defensive measures to protect currency reserves and limit the import bill. The combined actions signal a cautious approach amid persistent market uncertainty.
For global investors, the key implication is that Indian policy may act as a counterbalance to gold’s upward momentum. While investment demand for the metal remains strong, a sustained decline in Indian physical purchases could slow price rallies. ING recommends monitoring Indian import data as a leading indicator for physical demand, noting that further protectionist measures by other nations could structurally alter commodity markets.
