India hikes bullion import duties to arrest rupee slide
Pure gold bullion models captured in Shanghai, China, on March 15, 2026.
Cphoto | Future Publishing | Getty Images
India, the world’s second-largest gold consumer, raised import duties on gold and silver from 6% to 15%, days after Prime Minister Narendra Modi urged citizens to restrict bullion purchases for a year as purchases from abroad weigh on the rupee.
The government imposed a basic customs duty of 10 percent and a tax of 5 percent on imports of gold and silver. published notifications on Wednesday.
of india Average monthly gold import increased to 83 tons That’s up from an average of 53 tonnes in 2025, compared to an average of 53 tonnes in the first two months of 2026, according to a World Gold Council report published last month.
“This was largely supported by strong investment demand in January,” the report said. According to the report, in terms of value, India’s gold demand has almost doubled annually in the first quarter of 2026, reaching a record level of $25 billion.
However, this demand for gold inflates the country’s import bill, which is already rising due to rising global energy prices and disruptions in the Middle East.
India is a net importer of goods and Trade goods deficit is more than $330 billion For the fiscal year ending March 2026, that figure was up from $280 billion the previous year.
gold and silver It constituted about 11% of India’s total imports, while crude and petroleum products accounted for 22%.
“Lower gold imports could help reduce India’s current account outflows as gold import expenditures are significant,” Vishrut Rana, Asia-Pacific economist at S&P Global Ratings, told CNBC in an email. But “energy costs are still front and center and as these rise, we expect pressure on the rupee to continue.”
The South Asian country imports about 85% of its fuel needs and relied on the Strait of Hormuz for about 50% of its pre-war crude imports, 60% of its liquefied natural gas and almost all of its liquefied petroleum gas (LPG) supplies.
Higher energy costs are expected to significantly widen the country’s trade deficit and current account deficit. These concerns caused the market to weaken. rupee against dollarsent it to record low levels in recent days.
“India is stepping back on the market liberalization that investors like about India,” Trinh Nguyen, senior economist at Natixis, told CNBC’s “Inside India” on Wednesday.
Nguyen added that the country did not increase fuel prices at the pump, which would lead to “demand destruction,” but instead increased import taxes and moved away from liberalizing the economy.
On Monday, Modi appealed to Indians to use public transport, work from home and carpool to save fuel. This makes India the latest country to join a growing number of Asian countries encouraging lower fuel consumption as energy costs rise amid tensions in the Middle East.
