The government currently has no plans to increase import duties on gold and silver following Prime Minister Narendra Modi’s recent appeal asking Indians to avoid non-essential gold purchases for a year amid rising crude oil prices and tensions in West Asia, a government source told news agency Reuters on Monday.
The clarification comes a day after , avoid unnecessary foreign travel and postpone gold purchases as India prepares for the economic impact of rising oil prices linked to the Iran conflict and fears surrounding the Strait of Hormuz.
The remarks had triggered speculation in sections of the market that the government could consider additional measures to curb gold imports if pressure on India’s current account deficit (CAD) intensifies further.
However, the latest indication from the government suggests policymakers are currently relying on persuasion rather than tax hikes or import restrictions.
India is the world’s second-largest consumer of gold and the largest consumer of silver. Gold imports are closely tracked because they significantly impact the country’s trade deficit and foreign exchange outflows.
The country’s gold imports are estimated at roughly $58–60 billion in FY2025, among the highest levels ever recorded, according to Akshat Garg, Head – Research & Product at Choice Wealth Private Limited.
The surge followed the Union Budget 2024 decision to slash customs duty on gold from 15% to 6%, which sharply increased imports.
Economists say gold has become one of India’s biggest import concerns after crude oil, especially at a time when Brent crude prices have surged above $105 per barrel amid escalating geopolitical tensions.
India imports more than 85% of its crude oil requirements, making the economy highly vulnerable to oil price shocks.
Gold imports alone now account for roughly 8–10% of India’s total merchandise import bill and contribute nearly one-fifth of the country’s trade deficit, according to Garg.
The concern is linked to India’s current account deficit, which measures the gap between foreign exchange flowing into the country and the money flowing out through imports and overseas spending.
Economists say , pressure the rupee and increase imported inflation.
PM Modi’s appeal has already triggered sharp reactions in financial markets, with jewellery-related stocks witnessing selling pressure amid fears of weaker consumer demand during the upcoming wedding and festive season.
However, analysts believe India’s long-term gold demand is unlikely to weaken significantly because gold remains deeply embedded in household savings and cultural spending patterns.
Some experts have also pointed out that gold demand in India has historically remained resilient unless accompanied by stronger policy measures such as duty hikes or import restrictions.
For now, though, the government appears keen to avoid signalling any immediate tightening in import policy even as oil prices and external sector concerns remain elevated.