India’s gold import: How it impacts our economy | An explainer
Emphasizing that the center is trying to protect people from the negative effects of the conflict in West Asia, Modi on Sunday called for rational use of fuel, postponing gold purchases and foreign travel, among other measures to strengthen the economy.
Here are a few questions and answers to understand gold imports in India.
IMPORT DATA:
India’s gold imports have increased by over 24 percent in 2025-26, reaching an all-time high of $71.98 billion. It was $58 billion in 2024-25, $45.54 billion in 2023-24, $35 billion in 2022-23, $46.14 billion in 2021-22, $34.62 billion in 2020-21 and $28.2 billion in 2019-20.
However, in terms of volume, it decreased by 4.76 per cent to 721.03 tonnes in 2025-26 from 757.09 tonnes in 2024-25. It was 795.2 tonnes in 2023-24 and 678.3 tonnes in 2022-23.
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India is the world’s second largest consumer of gold after China. Imports largely come from the jewelry industry. Traditionally seen as a safe-haven asset during times of geopolitical uncertainty, gold demand in India tends to increase when global risks increase.
REASONS FOR THE SKIP IN IMPORTS:
According to the commerce ministry, the increase in gold imports was due to the rise in prices from US$ 76,617.48/KG (FY25) to US$ 99,825.38/KG (FY26). Prices of the precious metal in the national capital hover around Rs 1.5 lakh per 10 grams. It had crossed Rs 1 lakh mark for the first time in April last year.
EFFECT OF HIGH IMPORTS:
Increasing imports of precious metals put pressure on the country’s trade deficit and foreign exchange outflow.
The increase in imports has pushed the country’s trade deficit (the difference between imports and exports) to US$ 333.2 billion in 2025-26.
Imports have implications for India’s current account deficit (CAD).
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India’s current account deficit widened to $13.2 billion, or 1.3 percent of GDP, in the December quarter from $11.3 billion in the same period a year ago, according to RBI data released on March 2. This was mainly due to the high trade deficit caused by the decline in exports to the United States.
The precious metal accounts for more than 9 percent of the country’s total imports. India’s imports in 2025-26 were $775 billion.
SOURCE COUNTRIES:
Switzerland is India’s largest source of gold imports with a share of around 40 percent, followed by the UAE (over 16 percent) and South Africa (around 10 percent). Total imports of goods (including gold) from Switzerland increased by 11.36 percent to $24.27 billion in 2025-26.
STEPS TO PREVENT GOLD IMPORT:
To discourage these imports, the government imposed import restrictions on all types of gold, silver and platinum items. The aim of the move was to check the abuse of free trade agreements and prevent the import of these precious metals from countries like Thailand in the name of studless jewellery.
According to experts, some traders were trying to use the India-Asia free trade agreement to make a quick buck by taking advantage of tax differences and bypassing tariffs.
IMPORT TAX:
India increased the gold import tax from 10.75 percent to 15 percent in 2022 to control the current account deficit and increasing imports of the yellow metal. In May 2022, 107 tons of gold were imported. In the 2024-25 Budget, the tax was reduced to 6 percent in a bid to boost the domestic gem and jewelery industry, curb illegal smuggling and reduce local prices.
OPINIONS OF EXPERTS:
Think tank GTRI has urged the government to review FTA policies, especially the tariff concessions on precious metals offered to Dubai under the India-UAE trade deal, as this has significantly contributed to the recent surge in gold imports.
The India-UAE Comprehensive Economic Partnership Agreement (CEPA) came into force in May 2022. Under the agreement, India allowed imports of gold from the United Arab Emirates at tariffs one percentage point below normal import duties through the Tariff Rate Quota (TRQ) system.
The quota started at 120 tonnes per year and will increase to 200 tonnes from 2027, accounting for around 25 percent of India’s gold imports.
GTRI Founder Ajay Srivastava said, “The benefit has increased further after India reduced the regular gold import duty from 15 percent to 6 percent in Budget 2024. As a result, gold imported from Dubai effectively entered India with only 5 percent duty.” he said.
Since then, there has been an increase in imports from Dubai. India’s gold bullion imports from the UAE increased from $2.9 billion in 2022 to $6.7 billion in 2023 and $16.5 billion in 2025. Dubai’s share in India’s gold imports has increased from 7.9 percent before the FTA to 28 percent in 2025, he said.
“This trend raises concerns as the UAE does not mine gold or conduct any major processing activities. A large part of the trade appears to involve routing gold from third countries through Dubai to take advantage of low Indian tariffs.”
It recommended stricter rules of origin, review of precious metal concessions under free trade agreements and exclusion of gold, silver, platinum and diamonds from future trade agreements to protect India’s trade balance and foreign exchange reserves.
