Kolkata: The Centre has raised import duty on gold and silver to 15% from 6%. The new rates has come into effect. The raising of import duty is designed to discourage imports and follows the PM’s appeal to the people to curb consumption of gold in order to save precious foreign exchange of the country. The 15% can be spilt as 10% basic customs duty and 5% Agriculture Infrastructure and Development Cess (AIDC). The government expects the elevated import duty to rein in imports and narrow down the trade deficit. This, in turn, will help arrest the fall of the value of the rupee against the US dollar.
Why the focus on gold?
The reason for the focus on gold is clear. The yellow metal is the second most expensive item on the country’s import bill after crude oil. As Indians keep on buying gold despite the big rise in prices, more and more gold needs to be imported. This is turn, creates demand for more and more dollars. This drives down the value of the rupee against the US dollar. Since Indians buy gold for different reasons — jewellery, bullion and for investment purposes — the demand for the yellow metal never really goes down significantly.
Gold imports in India
India is the world’s second-biggest gold consumer after China. A lot of gold import is driven by the jewellery industry. However, there is a rising demand from the investment community too. India’s gold imports rose by more than 24% to an all time high of $71.98 billion in FY26. The imports stood at $58 billion in FY25 and $45.54 billion in FY24. India imported gold worth $35 billion in FY23, $46.14 billion in FY22, $34.62 billion in FY21 and $28.2 billion in FY20. However, the volumes of gold imports declined 4.76% to touch 721.03 tonnes in FY26 from 757.09 tonnes in FY25. In FY24 it stood at 795.2 tonnes and in FY23 at 678.3 tonnes.