A solid gold bar model captured in Shanghai, China on March 15, 2026.
Photo | Future Publishing | Getty Images
India, the world’s second-largest gold consumer, raised import duties on gold and silver from 6% to 15%, days after Prime Minister Narendra Modi called on people to curb their bullion purchases for a year as overseas purchases weighed on the rupee.
The government has imposed 10% basic customs duty and 5% tax on imports of gold and silver, as per a notification issued on Wednesday.
India’s average monthly gold imports rose to 83 tonnes in the first two months of 2026 from an average of 53 tonnes in 2025, according to a World Gold Council report released last month.
“This was mainly supported by strong investment demand in January,” the report said. According to the report, India’s gold demand by value almost doubled year-on-year to $25 billion in the first quarter of 2026.
But demand for this gold is driving up the country’s import bill, which is already rising due to rising global energy prices and turmoil in the Middle East.
India is a net importer of goods, with a merchandise trade deficit of more than $330 billion in the fiscal year ending March 2026, up from more than $280 billion a year earlier.
Gold and silver accounted for nearly 11% of India’s total imports, while crude oil and petroleum products accounted for 22%.
“Gold import spending is significant, so a reduction in gold imports could certainly help reduce India’s current account outflows,” Vishrut Rana, Asia-Pacific economist at S&P Global Ratings, told CNBC in an email. However, it added: “Energy costs remain central and we expect pressure on the rupee to continue despite rising energy costs.”
The South Asian country imports almost 85% of its fuel needs, and before the war it relied on the Strait of Hormuz for about 50% of its crude oil imports, 60% of its liquefied natural gas, and almost all of its liquefied petroleum gas (LPG) supplies.
Rising energy costs are expected to significantly widen the country’s trade and current account deficits. These concerns are rupee vs dollarwhich has hit record lows in recent days.
“Even though India is backing away from market liberalization, investors still like India,” Trinh Nguyen, senior economist at Natixis, told CNBC’s “Inside India” on Wednesday.
Nguyen added that the country has not raised fuel prices that would lead to “demand destruction” and has instead increased import duties and moved away from economic liberalization.
Prime Minister Modi on Monday urged Indians to use public transport, work from home and carpool to save fuel. This makes India the latest country to join a growing number of Asian countries encouraging lower fuel consumption as energy costs rise amid tensions in the Middle East.
