The Central Government is considering a reduction in import duties on gold and silver as high tariffs have failed to curb imports and are reportedly encouraging illegal trade and smuggling, according to industry representatives.
Rajesh Rokade, Chairman of the Gems and Jewellery Council, said the increase in import duty had not resulted in the expected decline in gold inflows into the country. Instead, the high duty structure has contributed to the growth of illegal transactions and smuggling.
The government had earlier increased the import duty on gold and silver from 6% to 15% amid tensions in the Middle East, with the objective of protecting the country’s foreign exchange reserves. However, despite the higher duty, India’s gold imports continued to rise.
According to the data cited, the value of India’s gold imports increased by around 24% in the financial year 2026, reaching $71.9 billion. The continued growth in imports despite higher duties has prompted the government to reconsider the existing policy.
India is the world’s second-largest consumer of gold after China, with gold playing a significant role in household savings, jewellery demand and investment. Any reduction in import duty could therefore have a direct impact on domestic gold prices, jewellery demand and the organised jewellery sector.
Industry stakeholders have been calling for a more balanced duty structure to discourage smuggling while ensuring that legitimate imports remain competitive. A lower import duty could potentially narrow the gap between legal and illegal gold prices and help bring more trade into the formal economy.
The government is expected to assess market conditions and the broader economic situation before taking a final decision. If implemented, a reduction in import duty on gold and silver could significantly influence the precious metals market and benefit consumers as well as the organised jewellery industry.