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New Delhi. The government on Wednesday increased the import duty on gold and silver to 15 percent to curb non-essential imports in view of the growing pressure on foreign exchange reserves due to the West Asia crisis. Import duty on gold and silver has been increased from six percent to 15 percent, while on platinum it has been increased from 6.4 percent to 15.4 percent. This will be considered effective from May 13.

As a result, changes have also been made in the tax on gold/silver strings, coins, other items etc. In the financial year 2025-26, the import of gold and silver increased by 26.7 percent on an annual basis to reach US $ 102.5 billion. Due to this, their share in total imports increased from 11.8 percent to 14 percent. This notification has been issued after Prime Minister Narendra Modi called for measures like judicious use of fuel, purchase of gold and postponement of foreign travel to save foreign exchange in view of the West Asia crisis.

India is the world’s second largest consumer of gold after China. Here gold is mainly imported for making jewellery. A lot of foreign currency is used in such imports. Sources said the move “can significantly contribute to overall macroeconomic stability and prudent management of the external sector through a balanced reduction in non-essential imports at a time of external stress.” Under the duty hike, the basic customs duty on gold has been doubled to 10 per cent, while the Agricultural Infrastructure and Development Cess (AIDC) has been increased five times from one per cent to five per cent. With this, the effective import duty on gold and silver has become 15 percent. Additionally, importers will have to pay three percent integrated GST (IGST), taking the total duty to 18.45 percent from 9.18 percent earlier.

All India Gems and Jewelery Council (GJC) Chairman Rajesh Rokade told PTI that this could make gold costlier by about Rs 27,000 per 10 grams. He said, “The industry fears that this will increase black marketing and smuggling. Meanwhile, Suvankar Sen, managing director and chief executive officer (CEO) of jewelery retail company Senco Gold and Diamonds, said import duties will remain high as long as the West Asia crisis persists. Also, unless the crude oil supply chain stabilizes, crude oil prices will also remain high. He said, “So it is possible that this level will remain for about a year.” In terms of quantity, there may be a 10-15 percent impact on demand, but in terms of value it will be more. Consumers will buy lighter weight jewellery.” Government sources said the duty hike is a “preventive step” amid “extraordinary external circumstances”. This is a sign of prudent economic governance. This reflects India’s proactive response to emerging external risks through targeted interventions. This reduces the need for more drastic corrective measures later. “Furthermore, rather than resorting to quantitative restrictions or more stringent import-management instruments, this approach relies on moderate price-based disincentives that maintain market flexibility and consumer choice,” he said.

Sources said the increase in customs duty on precious metals is aimed at controlling unnecessary import demand and reducing pressure on the external account. This is a “balanced and proportionate intervention” that encourages a reduction in non-essential imports at a time when external risks remain elevated. “India’s foreign exchange resources should be prioritized for essential imports such as crude oil, fertilizers, industrial raw materials, defense requirements, critical technologies and capital goods,” the sources said. These imports directly support economic activity, food security, infrastructure, manufacturing, exports, and national security.” The war in West Asia and the blockage in the Strait of Hormuz have driven up prices of crude oil, food and fertilizer imports. Brent crude oil prices have risen from about $73 a barrel before the war began on February 28 to about $107 a barrel. On April 30, it reached a four-year high of $ 126 per barrel.

India imports 87 percent of its crude oil needs, of which 46 percent comes through the Strait of Hormuz. India imports 60 percent of its LPG, of which more than 90 percent comes from the Gulf region. Moreover, 38 percent of India’s annual remittances come from the Gulf countries. India’s gold imports to reach an all-time high of US$ 71.98 billion in 2025-26, up by over 24 per cent. However, in terms of quantity, imports declined by 4.76 percent to 721.03 tonnes. Gold prices have increased from $76,617.48 per kg in 2024-25 to $99,825.38 per kg in 2025-26.

In the national capital on Tuesday, gold prices rose by Rs 1,500, or about one per cent, to Rs 1,56,800 per 10 grams. It was Rs 1,55,300 per 10 grams on Monday. Silver prices also rose by Rs 12,000, or 4.53 per cent, to Rs 2,77,000 per kg. In the international market, spot gold fell by $42.33, or one per cent, to $4,692.64 an ounce, while silver fell by 3.04 per cent to $83.49 an ounce. Chief Economic Adviser (CEA) V. Ananth Nageswaran on Tuesday said the West Asia crisis is “a test of direct pressure on the balance of payments which has direct impact on inflation, current account and exchange rate.” Balance of payments is the difference between inflow and outflow of foreign currency from the country in a given period. It is noteworthy that Prime Minister Narendra Modi has appealed to adopt austerity measures in view of the tension in West Asia. Modi had said on Sunday that the government was trying to protect people from the adverse effects of the West Asia crisis. There is a need to take steps like judicious use of fuel, postponing the purchase of gold and postponing foreign trips so that the economy can be strengthened.