Gold prices in India are once again at the centre of attention after a sharp hike in import duties, raising concerns over how much more consumers will end up paying for jewellery and investment purchases.
With gold already trading near record highs and silver following a similar trajectory, the latest policy move is expected to intensify price pressure, reshape demand trends, and keep both markets highly volatile in the months ahead.
The government has increased the effective import duty on gold and silver to around 15%, up from roughly 6% earlier, combining a 10% basic customs duty with a 5% Agriculture Infrastructure and Development Cess (AIDC).
This means imported gold and silver entering India will now cost significantly more before reaching jewellers, traders and ultimately consumers.
How much more expensive gold could become
While international gold prices remain unchanged, the higher import tax is expected to push domestic prices higher.
In simple terms:
- Import cost has increased by nearly 9 percentage points
- Jewellers are likely to pass most of this cost to buyers
- Silver prices are also expected to move in the same direction
This does not change global bullion rates, but it increases the "India premium" on gold and silver.
Why the government increased the duty now
The timing of the hike is linked to broader economic pressures rather than just commodity pricing.
Key reasons include:
- Rising imports: India's gold imports surged to record levels, crossing $71 billion in 2025-26
- Pressure on foreign exchange reserves: Heavy bullion imports increase demand for dollars
- Widening trade deficit: Higher imports are adding strain on India's external balance
- Rising global prices: Gold has become more expensive internationally, worsening import bills
- The government's move is aimed at cooling import demand and stabilising macroeconomic indicators.
Impact on jewellery and demand
India is one of the world's largest gold-consuming markets, where demand is driven mainly by jewellery purchases.
With higher duties:
- Jewellery prices may rise ahead of festive and wedding demand
- Retail demand could slow if prices remain elevated
- Recycling of old gold may increase as consumers try to avoid new purchase costs
- Jewellery stocks have already shown volatility in anticipation of margin pressure
Wider economic context
Gold accounts for a significant share of India's imports and has a direct impact on the current account deficit.
Higher duties are expected to:
- Reduce import volumes over time
- Ease pressure on the rupee
- Support foreign exchange reserve stability
However, analysts note that strong cultural demand for gold in India may limit how sharply imports actually fall.
Why this matters now
The duty increase comes at a time when geopolitical tensions and global uncertainty have already pushed gold prices near record highs. In such conditions, any additional domestic tax burden amplifies price sensitivity for buyers.
For consumers, the immediate effect is likely straightforward: buying gold or silver in India may become noticeably more expensive in the short term.