Import Duty Hike Hits Bullion: India Gold Import Volume Plummets 70%

A sharp increase in import duties, from 6% to 15%, has effectively cooled demand for the yellow metal, though rising global prices continue to inflate the total import bill.

New Delhi: The government’s recent intervention to curb the appetite for precious metals appears to be biting hard. Following the May 13th decision to hike the import duty on gold and silver from 6% to 15%, official figures confirm a dramatic shift in trade patterns. The volume of india gold import has nosedived by 70%, dropping from a monthly average of 75-100 tonnes to just 25-30 tonnes in the weeks following the policy change.

As the world’s second-largest consumer of ಚಿನ್ನ (gold), India’s reliance on the metal has long been a structural challenge for its current account deficit. With gold accounting for over 5% of the nation’s total import value, Prime Minister Narendra Modi had previously urged a cautious approach to consumption, aiming to reduce the heavy outflow of foreign exchange—a stance that has gained renewed urgency amid the ongoing instability in West Asia.

The Valuation Paradox

While the volume of imports has shrunk, the fiscal impact remains heavy. Because global gold prices have surged, the monetary value of these imports has not followed the same downward trajectory. Data from the Ministry of Commerce reveals that in May, the value of gold imports actually rose by 34% year-on-year to $3.41 billion. This trend persisted into the April-May period of 2026-27, which saw a 60.14% spike in import value, reaching $9.04 billion.

Why it matters

This data paints a complex picture for policymakers. The government is essentially fighting a two-front war: trying to suppress physical demand through taxation while battling the inflationary pressure of global commodity prices. The sharp drop in tonnage is a clear success for the duty hike, but the rising dollar-denominated import bill suggests that as long as international prices remain elevated, the strain on the national exchequer will persist regardless of the quantity of bars and coins crossing the border.

The decision reflects a broader strategy to prioritize forex reserves over consumer demand for physical assets. For the average investor, the message is clear: the cost of holding gold has moved significantly higher. Whether this leads to a sustained shift toward financialized gold products, such as sovereign gold bonds, or simply pushes the market toward local recycling remains the next big question for the economy.