India Raises Gold Import Duties to 15% as Government Moves to Protect Rupee and Foreign Reserves

Under the revised structure, the government imposed a combined 15 percent levy consisting of a 10 percent basic customs duty and a 5 percent Agriculture Infrastructure and Development Cess. The move comes after Prime Minister Narendra Modi, during a public address in Secunderabad on May 10, appealed for financial restraint and urged citizens to support efforts aimed at protecting India’s foreign reserves.

The government’s decision follows a surge in gold imports, which reportedly reached 721 tonnes last year, alongside increasing pressure from elevated global oil prices. Authorities view the sharp rise in precious metal imports as a major factor contributing to stress on the country’s external finances and currency stability.

The immediate market reaction was significant. Domestic gold prices reportedly climbed between 5 and 7 percent shortly after the announcement, while shares of jewelry companies witnessed declines as investors reacted to concerns over weaker consumer demand and higher procurement costs.

The policy has also triggered strong reactions among consumers and traders across the country. Some citizens welcomed the decision as a patriotic economic measure intended to safeguard national financial interests. Reports emerged of individuals canceling planned wedding gold purchases in support of the government’s appeal for austerity and reduced imports.

However, the jewelry industry expressed concern over the sudden increase in duties. Traders and retailers warned that the higher tax burden could disrupt the wedding season market, weaken sales, and encourage illegal smuggling networks seeking to bypass official import channels. Industry representatives fear that a sharp increase in unofficial gold inflows could create long-term challenges for regulated businesses and revenue collection.

The decision represents one of the government’s strongest recent interventions in the precious metals market and highlights growing concern over the balance between consumer demand, currency stability, and protection of foreign reserves. With gold deeply connected to household savings and wedding traditions in India, the impact of the revised import duties is expected to resonate across financial markets, retail trade, and consumer sentiment in the coming months.