India doubles tariffs on gold and silver
India has doubled its import tariffs on gold and silver to cushion the impact of the Middle East conflict on its foreign exchange reserves.
New Delhi has imposed a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess on gold and silver imports, raising the effective import tax from 6% to 15%.
The move is aimed at curtailing overseas purchases and easing the pressure on its foreign exchange reserves.
This comes days after Prime Minister Narendra Modi advocated steps including refraining from gold purchases and reducing the use of fuel as part of an effort to minimize the economic shocks arising from the Middle East conflict.
The government is reportedly considering a host of measures including a fuel price hike and restrictions on non-essential spending to shield its foreign exchange reserves.
Foreign exchange reserves as of May 1 stood at $690 billion, a significant decline from $728 billion in February. The dollar outflows have also impacted the rupee, Asia’s worst-performing major currency, which is down 5.6% this year.
Gold demand in India, the world’s second-largest buyer, has risen amid a recent rally in prices and as returns from equities plunged over the past year.
The nation’s imports of gold totaled $72 billion in the 2026 fiscal year ending March 31, a 24% surge from a year ago. Higher imports of gold widen India’s current account deficit because India pays in foreign currency for gold.
The move reflects growing concern among policymakers over the rising import bill and shrinking forex reserves, driven mainly by energy supply disruptions as hopes for an end to the Middle East conflict fade.
India’s overall trade deficit widened to $119 billion in 2025-26, compared to $94 billion in 2024-25, mostly as a result of higher energy and fertilizer prices and rising bullion imports.
