FLASH NEWS
India more than doubles tariffs on gold imports
2026-05-13 16:58:10 / BOTA
India has more than doubled import tariffs on gold and silver in an effort to strengthen the rupee and cushion the economic impact caused by rising energy prices and the war in Iran.
Rising oil prices are putting pressure on the Indian currency and foreign exchange reserves.
The government's decision to increase the import tax on gold and silver from 6% to 15% comes just days after Indian Prime Minister Narendra Modi urged citizens to reduce spending, especially on fuel, foreign travel and gold, which significantly contribute to the country's growing trade deficit.
"The tariff hike was expected after the prime minister's statement," said Surendra Mehta, national secretary of the Gold Merchants and Jewellers Association of India, predicting that this will reduce demand for gold by about 10% in one of the world's largest markets.
"This tariff hike gives immediate relief to the government. If the rupee's overnight fall is to be stopped, this is the only measure ," he added.
The rupee, already weakened, has fallen 5% against the US dollar since the US and Israel began bombing Iran in late February.
It is currently trading below 95.5 rupees per dollar, despite numerous interventions by the central bank.
The central bank's dollar reserves fell by $40 billion in the first month after the war. India's gold imports reached $72 billion as of March 31, about a quarter more than a year earlier. Silver imports, meanwhile, rose by nearly 150% to $12 billion in the same period.
Despite the weakening rupee, India remained one of the main drivers of global gold demand, ranking second in both jewelry and investment, according to the World Gold Council.
India's trade deficit for the year to the end of March widened to $120 billion, from $95 billion a year earlier, weighed down by rising costs of energy, fertilizers and gold.
According to Jefferies analysts, the increase in import tariffs is likely to increase gold prices in the domestic market and could affect consumer demand, as well as add to concerns about gold smuggling.
Goldman Sachs estimated in a report that Indian households own gold worth about $3.8 trillion, nearly 90% of the country's GDP. It notes that gold remains an important asset as a store of value and hedge against inflation.
Following the news, shares of jewellery companies like Kalyan Jewellers and Thangamayil Jewellery fell over 5%, while gold ETFs rose over 4%.
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