India's gold rush meets a speeding ticket, but industry fears smuggling and job loss

Subscribe to enjoy similar stories.Days after Prime Minister Narendra Modi made a clarion call for austerity, the Centre sharply raised import duty on precious metals to save dollars, at a time when the Gulf crisis boosts energy prices, weakens the rupee, and eats into the nation's current account. While economists said the decision could dampen demand and arrest the rupee's fall, others said it may fuel smuggling and impact jobs in the jewellery sector.The finance ministry increased the total import duty on gold, silver and platinum from 9.18% to 18.45%.

The new rate includes 10% basic customs duty, 5% agriculture cess and 3.45% Integrated GST, up from 5%, 1% and 3.18% before. The move signals an effort to conserve forex as costly oil and shipping disruptions threaten to widen India’s import bill and worsen the current account deficit (CAD).“Precious metals, while culturally and financially important, are largely consumption-and investment-driven imports involving significant foreign exchange outflows,” a finance ministry official said, adding this is a calibrated intervention rather than an anti-consumer measure.

The goal is to save forex for essential imports such as crude oil, fertilizers, industrial raw materials, defence equipment, capital goods and critical technologies.Wednesday's move reverses the steep tariff cuts announced in the 2024 budget, when duties on gold and silver were reduced from 15% to 6%, and on platinum from 15.4% to 6.4%. It resulted in a drop in gold smuggling cases by about 50% in FY25 compared to the previous year, with seizures falling to 2,600 kg from nearly 5,000 kg in FY24.In a market that closed more or less unchanged, jewellery stocks traded mixed; shares of Titan Co.