Why India Keeps Hiking Gold Import Duty: History, Reasons And Economic Impact
Soon after India’s Prime Minister Narendra Modi asked Indians to stop buying gold for one year, the government announced a big move by more than doubling the import duty on gold.
Announced on May 13th, 2026, the effective import duty on gold was raised from 6% to 15% (including 10% Basic Customs Duty + 5% Agriculture Infrastructure and Development Cess).1 But this is not the first time the government has announced such a move. In the last decade or so, gold import duty has been hiked multiple times for varying reasons.
Also Read: What Happens If India Stops Buying Gold For A Year?
Why India Keeps Hiking Gold Import Duty? History, Reasons And Impact
Let us understand when and why gold import duty was hiked in previous years and what impact it has on the common man.2
1. 2012: Gold import duty hiked from 2% to 4%
Initially in January 2012, the government changed the import duty tax from a flat rate system to a value based system. The import duty was revised from a flat rate of INR 300 per 10 grams to 2% of value.3 Then again in March 2012, the then Finance Minister Pranab Mukherjee significantly hiked gold import duty, this time doubling it from 2% to 4% to tackle mounting current account deficit , surging gold demand, and a weakening Rupee vs the US Dollar. 4
2. 2013: Gold import duty hiked from 4% to 10%
Amidst a record high current account deficit and a weakening Rupee, the government had to again hike gold import duty multiple times in 2013. The import duty on gold was first raised from 4% to 6% in January, then to 8% in June, and then to 10% in August 2013.5,6 Such aggressive hikes were also fueled by high gold imports putting immense pressure on the country’s financial health.
3. 2019: Gold import duty hiked from 10% to 12.5%
In a bid to reduce imports and boost revenue, Finance Minister Nirmala Sitharaman had hiked gold import duty from 10% to 12.5% in the interim budget of July 2019. The aim was to also strengthen the domestic industry, and manage the trade deficit.7
4. 2022: Gold import duty hiked from 10.75% to 15%
Though in February 2021 the govt had reduced the gold import duty (basic) from 12.5% to 7.5%, it introduced AIDC (agriculture infrastructure and development cess) of 2.5%, which meant the total gold import duty became 10.75% that year.
Then in July 2022, the gold import duty was raised from 10.75% to 15% in order to tackle a surge in imports that were putting pressure on the Rupee after the outbreak of the Russia Ukraine war. This helped the government protect its forex reserves and support the currency.8
2026: Gold import duty hiked from 6% to 15%
After sharply reducing the gold import duty from 15% to 6% in 2024-25 Union Budget, the government again hiked it to 15% in May 2026. 10
Previously in 2024-25, India’s gold import volume was falling significantly, which prompted the government to slash import duty, which supported the domestic gems and jewellery industry, and lowered domestic prices.11
Gold Import Hike’s Impact On Common Man
Whenever the government hikes gold import duty, there are two major impact areas you need to watch out for:
- Buying or investing in gold gets more expensive: If you are planning to buy gold for a wedding or even investing in gold bonds or ETFs, such gold import duty hikes increase the price of gold too, hence making it expensive to purchase gold and even invest in it.
- Your existing gold gets a higher market value: If you already own gold, it becomes more valuable after import duty hike. This is because all the fresh gold entering through import becomes costlier after the hike, which raises the market price of gold. So the value of your existing gold, be it as jewellery, coins, bars, ETFs or Gold mutual funds, increases. 12
Conclusion
This sudden hike in gold import duty is the government basically signalling you to avoid buying gold as much as possible. If you keep buying gold, it will keep putting pressure on India’s forex reserves. Such gold import duty hikes also signal that now might be the right time to finally diversify your portfolio beyond gold, through options like corporate bonds and FDs.
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FAQs On Gold Import Hike Impact
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Author: Grip Invest Editorial Team The Grip Invest Editorial Team is a group of Chartered Accountants, MBA (Finance) graduates, and Qualified Research Analysts dedicated to helping you invest smarter. We dive deep into India's fixed income landscape to deliver content that is accurate, up-to-date, and easy to understand. Whether you're exploring bonds, fixed deposits, or other fixed income opportunities, our guides cut through the noise and give you the clarity to make better financial decisions. |
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