India Slaps 15% Import Duty on Gold and Silver; Here’s Why Your Next Jewellery Purchase Will Cost a Lot More

With the West Asia war choking India’s foreign exchange reserves and the rupee hitting record lows, the Modi government has pulled the trigger on a sharp customs duty hike making gold, silver, and platinum significantly more expensive overnight.

India just made buying gold a whole lot pricier. The Finance Ministry, on Tuesday night, issued notifications sharply raising import duties on gold and silver from 6% to 15% effective May 13. Platinum import duties climbed from 6.4% to 15.4%. The move sent immediate ripples through jewellery markets and it was no coincidence that it came just days after Prime Minister Narendra Modi publicly asked citizens to hold off on buying gold for a year.

So what exactly is going on, and why is the government suddenly so worried about your next gold purchase?

The West Asia War Is Burning India’s Forex Reserves

The short answer is war. The ongoing conflict in West Asia, particularly the US-Iran war that erupted on February 28, has effectively sealed off the Strait of Hormuz. That narrow waterway is a lifeline for India. Around 46% of India’s crude oil imports transit through or near it. Over 90% of India’s LPG imports and India imports 60% of its LPG needs used to flow through it. Now, tanker traffic through the strait has dropped to just five vessels on a seven-day moving average.

The result? Brent crude prices have surged from around USD 73 per barrel before the war to USD 107 per barrel now. At one point on April 30, crude touched USD 126 per barrel a four-year high. India, which imports 87% of its crude requirement, is facing a ballooning energy bill. On top of that, food and fertiliser imports are also getting costlier.

Chief Economic Advisor V Anantha Nageswaran described the situation bluntly on Tuesday, calling the West Asia crisis a “live balance of payments stress test,” with direct consequences for inflation, the current account, and the exchange rate. The Indian rupee reinforced that assessment the same day hitting a record low of 95.63 against the US dollar.

Modi’s Austerity Push And Why Gold Was on the List

Prime Minister Modi, addressing a Telangana BJP rally in Hyderabad on Sunday, made an unusual personal appeal to the nation. He urged people to cut fuel consumption, avoid overseas travel, use metro and carpooling, switch to electric vehicles, and crucially postpone gold purchases. Those suggestions are now being backed up with policy.

India is the world’s second-largest gold consumer after China. Nearly all of that consumption gets met through imports. In 2025-26, gold imports surged over 24% to a record USD 71.98 billion accounting for nearly 9% of India’s total imports. In value terms, that figure was up from USD 58 billion the previous year, largely because gold prices rose sharply from USD 76,617 per kg in FY25 to USD 99,825 per kg in FY26.

That’s a massive outflow of foreign exchange for something that, unlike crude oil or fertilisers, doesn’t power factories or feed people. For a government trying to stretch every dollar of forex, non-essential precious metal imports are a tempting target.

What the Government Is Actually Trying to Do

Government sources explained the thinking behind the duty hike in carefully chosen words. “During periods of external stress, measured moderation of discretionary imports may contribute significantly to overall macro-economic stability and prudent external-sector management,” a source said.

The emphasis, sources stressed, was on preserving market flexibility not shutting the door entirely. “Rather than resorting to quantitative restrictions or more severe import-management tools, the approach relies on moderate price-based disincentives that preserve market flexibility and consumer choice,” another source added.

The government wants to channel forex towards what really matters right now crude oil, fertilisers, industrial raw materials, and capital goods that feed economic activity and food security. The 38% of annual remittances that originate from Gulf countries adds another layer of concern, since the West Asia crisis also threatens that income stream.

How Much More Will You Pay?

The numbers are stark. All India Gems and Jewellery Council (GJC) Chairman Rajesh Rokde said the duty hike will push up gold prices by around Rs 27,000 per 10 grams, compared to Rs 13,500 per 10 grams earlier. In Delhi, gold was already at Rs 1,56,800 per 10 grams on Tuesday up Rs 1,500 from Monday. Silver jumped Rs 12,000, or 4.53%, to Rs 2,77,000 per kg.

The Industry’s Biggest Fear: Smuggling

The gems and jewellery trade is worried and vocal about it. Rokde didn’t mince words. “What the industry fears is that this will give rise to the grey market… smuggling is likely to grow, setting up a parallel economy in the country,” he said.

That concern is not unfounded. The duty hike reverses the very cut the government made in its 2024-25 Union Budget when import tax was slashed to 6% specifically to discourage smuggling and support the domestic gems and jewellery sector. India had previously kept gold import duty at 15% until 2022, when it was later revised.

Senco Gold and Diamonds MD and CEO Suvankar Sen shared a more measured outlook. He expects the high duty to remain in place until the West Asia crisis settles. “So maybe for around one year it shall stay at these levels. The volumes might get impacted by 10-15 per cent, but value wise it will remain at a higher level. Consumers will buy lighter-weight jewellery,” he added.

What Has Changed in the Duty Structure

Beyond the headline rate for gold and silver bars, the Finance Ministry also adjusted duties across the precious metals ecosystem. Gold and silver findings tiny components like hooks, clasps, and pins used in jewellery making will attract a 5% customs duty. Platinum findings are now taxed at 5.4%. Spent catalysts and ash containing precious metals, meant for recycling, attract a concessional 4.35% duty subject to strict compliance conditions and recycling clearances.

The government framed the overall intervention as “calibrated and proportionate” a preventive measure against extraordinary external conditions, rather than panic policymaking. Whether that framing holds will depend on how long the war drags on and how patient India’s famously gold-loving consumers are willing to be.