India Gold Demand to Decline as Import Duty Hike Tightens Market
The move comes as the Indian rupee has weakened more than 7% year-to-date amid geopolitical uncertainty.
SEATTLE (Scrap Monster): India’s gold market is seen facing mounting pressure after the government’s recent decision to raise the gold import duty from 6% to 15%. The steepest increase on record is primarily aimed at curbing imports and conserving foreign exchange reserves.
The move comes as the Indian rupee has weakened more than 7% year-to-date amid geopolitical uncertainty. Authorities have also tightened rules under export-linked gold import schemes. Also, the delayed bullion import licenses for banks have led to restricted imports of gold, silver, platinum jewellery and alloys.
Despite the sharp duty hike, domestic gold prices have not fully reflected the increase, rising only 4%-6%, as weak seasonal demand and ample recycled gold supply have created deep discounts in local markets compared with official landed prices.
Analysts expect India’s gold demand to moderate significantly in 2026, with jewellery and bar-and-coin demand projected to decline by 50-60 tonnes, or roughly 10% year-on-year.
Historical data indicates that higher duties often trigger unofficial gold inflows. The smuggled gold imports into the country had witnessed sharp spike following previous duty hikes in 2013 and 2022.
April imports surged over 80% year-on-year to $5.6 billion, likely supported by refinery buying ahead of Akshaya Tritiya and possible buying activity amid fears of further restrictions.