India hikes gold, silver import duty to 15pc as rupee struggles
Higher taxes aimed at easing pressure on forex reserves
DUBAI/NEW DELHI – India has sharply increased import duties on gold and silver to 15% from 6%, effective Wednesday, as authorities moved to curb demand for precious metals and support the rupee amid widening trade deficit concerns.
The revised levy combines a 10% basic customs duty with a 5% Agriculture Infrastructure and Development Cess (AIDC).
The move comes as the rupee remains under pressure against the dollar, weighed down by elevated commodity imports and global uncertainty. Shortly after the announcement, the Indian currency showed modest recovery, trading at 95.61 against the dollar after touching historic lows in recent sessions.
Futures jump
The higher tariffs triggered a sharp rally in domestic bullion markets. Indian gold futures surged 7.2% to 164,497 rupees per 10 grams in early Wednesday trade, while silver futures climbed 8% to 301,429 rupees per kilogram.
Authorities are aiming to reduce overseas purchases of precious metals and ease pressure on foreign exchange reserves. India is the world’s second-largest consumer of gold, making bullion imports a major factor in the country’s trade balance.
Analysts expect the increased duties to push domestic gold and silver prices even higher, potentially slowing consumer demand. Industry officials, however, warned that steep import taxes could revive smuggling activity, a recurring issue whenever official import costs rise significantly.
The policy shift also comes amid rising tensions in the Middle East, which have boosted safe-haven demand for gold globally. Prime Minister Narendra Modi had earlier called for reducing gold imports to conserve foreign exchange reserves.