Gold import becomes a hassleImage Credit source: ai generated
PM Modi on Sunday asked people to postpone the purchase of gold so that the economy can get a boost. In fact, there has been a huge increase in the import of gold in the country in the last few years. India’s gold import increased by more than 24 percent to a record $ 71.98 billion in 2025-26. 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. Excessive import of gold puts pressure on the country’s trade deficit and foreign exchange expenditure.
Trade deficit will increase to $333.2 billion in 2025-26. The country’s current account deficit has also been affected. India is the world’s second largest gold consumer after China. The government has imposed controls on the import of gold, silver and platinum products to prevent abuse of free trade agreements. In fact, some traders were taking advantage of low tax countries and increasing imports in the name of unstitched jewelery from countries like Thailand. The effect of which can be clearly seen on the government treasury.
India is the largest importer of gold after China
India is the world’s second largest gold consumer after China. Imports are mainly driven by the jewelery industry. In times of global uncertainty, gold is considered a safe investment, which increases its demand. According to the Commerce Ministry, the increase in gold imports is mainly due to the rise in prices. The price increased from $ 76,617.48 per kg in 2024-25 to $ 99,825.38 per kg in 2025-26. The price of gold in the national capital is around Rs 1.5 lakh per 10 grams. In April last year, it had crossed Rs 1 lakh per 10 grams for the first time.
How does excessive import harm the economy?
Higher import of gold puts pressure on the country’s trade deficit and foreign exchange expenditure. Trade deficit increased to $ 333.2 billion in 2025-26. Current account deficit (CAD) was also affected. According to the Reserve Bank of India (RBI), CAD increased to $ 13.2 billion (1.3 percent of GDP) in the October-December quarter. The share of gold in total imports is more than nine percent. India’s total imports in 2025-26 were $ 775 billion.
From which countries does India import gold?
The largest source of gold for India is Switzerland (about 40 percent), followed by the United Arab Emirates (more than 16 percent) and South Africa (about 10 percent). The total merchandise imports (including gold) from Switzerland increased by 11.36 percent to $ 24.27 billion during 2025-26.
How will gold imports be reduced?
The government has imposed controls on the import of gold, silver and platinum products to prevent abuse of free trade agreements. Some traders were taking advantage of the duty difference to increase imports in the name of unstudded jewelery from countries like Thailand. In the year 2022, the import duty was increased from 10.75 per cent to 15 per cent. In the budget of 2024-25, it was reduced to six per cent to promote the jewelery industry and reduce smuggling. Yes.
What do experts say
Economic research institute Global Trade Research Initiative (GTRI) has asked the government to review the free trade agreements, especially the concessions given under the India-UAE trade agreement. Under this agreement, gold can be imported from UAE at a rate one percent less than the normal duty. This quota will increase from 120 tonnes to 200 tonnes by 2027. According to GTRI founder Ajay Srivastava, after the duty reduction in 2024, gold coming from Dubai is effectively reaching India at only five percent duty.
Gold import from UAE is increasing rapidly
Gold import from UAE has increased rapidly. It will be $ 2.9 billion in 2022, $ 6.7 billion in 2023 and $ 16.5 billion in 2025. Before FTA, Dubai’s share in India’s gold imports was 7.9 percent, which will increase to 28 percent in 2025. Srivastava said that this trend is worrying because UAE neither mines gold nor does any major processing work. It appears that much of the trade involves moving gold from third countries via Dubai to take advantage of India’s lower tariffs. GTRI has recommended stricter rules, review of concessions and exclusion of gold, silver, platinum and diamonds from future trade agreements, so as to protect India’s trade balance and foreign exchange reserves.
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