India’s gold imports jumped by 34% to $3.42 billion in May despite a sharp increase in tariffs and an appeal by Prime Minister Narendra Modi to avoid buying the precious metal to protect the country’s foreign exchange.
As per the Ministry of Commerce and Industry data, India imported gold worth $9.04 billion in the first two months of the current financial year, which is 60% higher when compared with the same period last year.
“Continued strong gold imports could keep pressure on India’s trade deficit and foreign-exchange outflows even after the sharp tariff increase,” said Ajay Srivastava, founder, Global Trade Research Initiative (GTRI).
Amid a record dip in the value of the rupee and weakening foreign exchange reserve, Prime Minister Modi on May 10 made a direct appeal to the citizens to avoid gold purchases for a year.
Just a couple of days after the Prime Minister’s appeal, the Central Board of Indirect Taxes and Customs (CBIC) more than doubled gold import duty from 6% to 15%, the single largest increase on record.
With 3% GST, the effective import duty on gold in India stands at 18.45%, one of the highest in the world. Despite such high tariffs, which have added to the cost, Indians’ love for gold has hardly been deterred.
“The resilience of gold demand reflects a combination of factors: strong jewellery consumption, investor demand for safe-haven assets amid global uncertainty, and record international gold prices that inflated the value of imports,” said Srivastava.
Gold import has been among the biggest contributors to the country’s widening trade deficit. India imported gold worth $72 billion in 2025-26, which was 24.1% higher than the previous year’s $58 billion. In 2023-24, India imported gold worth $45.54 billion.
India is the world’s second-largest consumer of gold after China. Almost all of India’s gold demand is met through imports.
The recent increase in the gold import bills has been largely due to the surge in prices. Gold import volume fell from 795.2 tonnes in 2023-24 to 721.03 tonnes in 2025-26. However, the import value during this period jumped from $45.54 billion to $72 billion.
Gold price rose marginally to $4,338 per ounce on Tuesday from $4,336 in the previous day. However, there has been a sharp increase in the gold price in a year. The price of one ounce of gold stood at $3,400 on June 16, 2025.
Higher outgo on gold imports has widened the trade deficit. The country’s merchandise trade deficit widened to $333.19 billion in the financial year ended March 2026 from $283.50 billion in the previous year.