India, the world’s biggest gold consumer after China, more than doubled import tariffs to 15% on May 13 to curb demand, cut the trade deficit and ease pressure on the rupee.
Also read: Gold imports fall to 25-30 tonnes/month from 70-100 tonnes after duty hike: Govt source
“The arbitrage is so huge. I mean, with the 15% duty and 3% GST, there’s an 18% difference, and that almost spurs an entire industry,” Sachin Jain, chief executive of the WGC’s Indian operations, told Reuters.
Grey market inflows and the disruption they cause are hurting organised players, he said.
The government didn’t immediately respond to Reuters’ queries.
Indian enforcement agencies seized nearly twice as much gold between May 13 and June 30 as they did between April 1 and May 12, with seizures rising to 160.91 kg from 86.16 kg, the government told parliament earlier this month.Gold smuggling fell to 69.2 metric tons in 2024 from 156.1 tons a year earlier, and declined further in 2025 to 20.4 tons after India cut import duties on gold, according to data compiled by the WGC.
The recent resurgence in the grey market suggests illegal imports could exceed 100 tons in 2026, industry officials told Reuters last month.
India’s net gold imports fell 23% year-on-year to 98.1 tons in the June quarter, the lowest quarterly level since September 2020, when pandemic-induced lockdowns curbed demand, the WGC said in a report published on Thursday.
Gold demand in the June quarter declined 6% from a year earlier to 131.4 tons, as falling jewellery purchases outweighed strong investment demand, the report said.
Demand is likely to improve in the second half of the year if prices remain stable, as many consumers who missed the earlier rally are expected to return to the market, Jain said.