The government’s latest decision to raise import taxes on gold and silver may reduce demand by about 10 per cent, according to the India Bullion and Jewellers Association (IBJA).
“The jewellery business could decline by 5–7 per cent, while overall demand may fall by nearly 10 per cent,” IBJA National Secretary Surendra Mehta said, according to a report by Moneycontrol.
The government on Tuesday raised the basic customs duty on gold to 10 per cent from 5 per cent and the Agriculture Infrastructure and Development Cess to 5 per cent from 1 per cent.
The decision came days after Prime Minister Narendra Modi urged citizens to stop buying gold for a year in order to save foreign exchange for purchasing more critical commodities such as fuel and fertiliser.
India’s gold imports surged more than 24 per cent to an all-time high of $71.98 billion in 2025-26.
Gold is among the biggest contributors to India’s import bill.
According to the report, Mehta expressed concerns over the increased risk of gold smuggling.
“Illegal imports are possible, which will help non-genuine businessmen,” he reportedly said.
The same concern has also been raised by the Gem & Jewellery Export Promotion Council.
On Wednesday, the council warned that the government’s decision to raise import duties would not help reduce imports and would instead inflate prices.
The council also urged the government to hold discussions with all stakeholders to reach a sustainable solution to the crisis.
“Hiking import duties rarely curbs gold imports; it merely inflates prices. Despite gold prices doubling recently, imports have not declined proportionally,” the council said.
Concerns have also been raised about reduced liquidity conditions for exporters.
The export council said traders will face increased bank guarantees of Rs 28-30 lakh per kg of duty-free gold sourced from nominated agencies.
According to the World Gold Council, every 1 per cent rise in import duty reduces consumer gold demand by approximately 6.4 tonnes.
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