The central government has raised customs duties on imports of precious metals, including gold and silver from 6% to 15%, just days after Prime Minister Narendra Modi urged people to adopt austerity measures such as deferring decisions to buy gold by one year to save previous foreign exchange amid global economic upheavals due to the war in West Asia.
“The policy measure aimed at safeguarding macroeconomic stability, conserving foreign exchange, and moderating non-essential imports during a period of heightened global uncertainty arising from the ongoing West Asia crisis,” a government official said requesting anonymity.
Import duty on gold and silver has been increased from 6% to 15%, while the import duty on platinum has been increased from 6.4% to 15.4%. Consequential changes have also been made to other items such as gold and silver doré, coins, and findings, he said.
“The current geopolitical situation has created significant volatility in global crude oil markets and international shipping routes. As a large importer of crude oil, India remains vulnerable to elevated energy prices and supply-side disruptions, which can increase the import bill, exert pressure on inflation, and the current account deficit (CAD). In such circumstances, prudent management of the country’s external sector becomes essential,” he said.
Historically, customs duty adjustments have been used as one of several policy instruments to support macroeconomic stability and effectively manage CAD-related pressures during periods of global volatility.
India’s foreign exchange resources must, therefore, be prioritised towards essential imports such as crude oil, fertilisers, industrial raw materials, defence requirements, critical technologies, and capital goods, the official said. These imports directly support economic activity, food security, infrastructure, manufacturing, exports, and national security, he added.
In contrast, precious metals, while culturally and financially significant, are predominantly consumption and investment driven in nature. Such imports involve substantial outflow of foreign exchange. Further, precious metals occupy a unique position in the import basket because they involve significant foreign exchange outflows while being relatively less linked to productive industrial activity compared to sectors such as energy, manufacturing inputs, infrastructure, or technology.
“In periods of heightened geopolitical and commodity market volatility, policymakers often seek to prioritise external resources towards areas with higher strategic and economic multiplier effects. Therefore, during periods of external stress, measured moderation of discretionary imports may contribute significantly to overall macroeconomic stability and prudent external sector management,” he said.
The increase in customs duty on precious metals is intended to moderate avoidable import demand and ease pressure on the external account. The measure is neither prohibitory nor anti-consumer in nature. It is a carefully calibrated and proportionate intervention designed to encourage moderation in non-essential imports at a time when external vulnerabilities remain elevated, the official said.
“The measure is also aligned with the broader national economic discipline emphasised by the Prime Minister in the context of the evolving global situation. Citizens have been urged to reduce avoidable foreign expenditure, promote domestic alternatives, conserve fuel, and support national economic resilience through responsible consumption choices. In this broader context, moderation in discretionary precious metal imports may be viewed as part of a wider collective effort to strengthen economic stability during a period of uncertainty,” he said.
The decision reflects a preventive and forward-looking approach to external sector management. As mentioned earlier, customs duty has historically served as an effective policy instrument for moderating non-essential imports and managing CAD-related pressures during periods of global volatility. Through this measure, the government seeks to prudently manage emerging risks and reduce vulnerability to potential external shocks before pressures intensify further, he said.
The duty increase also sends a clear signal of prudent economic governance. It demonstrates that India is responding proactively to emerging external risks through timely, measured and targeted interventions, thereby reducing the need for more disruptive corrective measures at a later stage, he said. “Further, rather than resorting to quantitative restrictions or more severe import management tools, the approach relies on moderate price-based disincentives that preserve market flexibility and consumer choice,” he said.
Customs duty on precious metals has historically been calibrated in response to prevailing macroeconomic and external sector conditions. During periods when external pressures moderated, foreign exchange reserves strengthened, and macroeconomic stability improved, customs duty rates on precious metals and related products have also been rationalised downward. A recent example is the Union Budget 2024–25, where customs duties on gold and silver were reduced from 15% to 6%, and on platinum from 15.4% to 6.4%, reflecting a more comfortable macroeconomic and external sector position at the time. Therefore, historically such duty calibrations have remained responsive to evolving economic and external conditions.
Overall, the current increase in import duty on precious metals is a part of a broader strategy aimed at conserving foreign exchange, protecting the current account, prioritising essential imports, and strengthening India’s economic resilience in the face of evolving global uncertainties. The measure represents a balanced, proportionate, and nationally responsible response to extraordinary external conditions while maintaining due regard for macroeconomic stability and long-term economic resilience.