Gold, Silver Import Duty Cut Under Discussion Amid Smuggling Concerns

The government is discussing whether to reduce duties on gold and silver from the current 15%, while bullion traders and jewellery industry representatives are seeking a cut to 6%. No decision has been taken yet.

The central government is discussing whether to reduce import duties on gold and silver amid concerns that the higher tax burden could be encouraging imports through unofficial channels, according to three sources cited in the report.

There is no decision yet on any reduction. However, some sections of the government are examining whether lowering the duty could reduce the incentive to smuggle gold and encourage more imports through formal channels, one government official said.

Bullion traders and representatives from the jewellery industry are pushing for the duty to be reduced to 6% from the current 15%, according to the sources.

Why is the government considering a duty cut?

The duties on gold and silver were increased to 15% on May 13, 2026, with the objective of reducing gold imports and conserving the country's dollar reserves.

Industry representatives have argued that a lower duty could narrow the cost gap between legally imported gold and gold brought into the country through unofficial channels. This, they believe, could reduce the incentive for smuggling.

One industry source said the higher duty resulted in a significant increase in smuggling.

“The government wants to conserve dollars, but there was a significant outflow through the parallel economy,” the source said. “The tax change just changed how much gold was imported legally.”

Gold imports remain elevated

India is one of the largest importers of gold, bringing in roughly 700-800 tonnes of the metal annually. The country also exports gold jewellery to markets including the UAE, Thailand and Singapore.

Gold imports had increased almost 82% year-on-year in April 2026, before the duty hike. The surge raised concerns because higher gold imports put pressure on India's foreign exchange buffers and can widen the current account deficit, which in turn puts pressure on the rupee.

The rupee had already depreciated by more than 6% year-to-date by mid-May, which was among the factors that prompted the government to raise gold duties.

Gold imports increased nearly 34% in May, when the higher duty was applicable for only about half the month.

In the first two full months after the duty hike, gold imports increased 5.5% to $6.13 billion in June and July, compared with $5.81 billion during the same period a year earlier.

Silver and platinum also under review

The government is also understood to be examining the issue in the context of silver and platinum, with discussions reportedly covering import duties across precious metals.

However, the contours, timing and scope of any potential change remain uncertain, according to another industry source.

Silver and platinum have industrial applications in addition to safe-haven demand. Silver is used in solar energy and electronics manufacturing, while platinum is used in automobiles and healthcare.

As a result, higher duties can help protect foreign exchange reserves but can also increase the cost of industrial inputs.

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What happens next?

The government has not taken a decision on reducing the duties. Industry representatives are seeking a reduction from 15% to 6%, while discussions within the government are focused on whether a lower duty could encourage more imports through formal channels and reduce the incentive for unofficial imports.

The timing and scope of any potential duty change remain uncertain.