Jewellers, buyers and investors are affected in different ways by India’s import duties 

The Government of India’s decision to sharply raise import duties on gold, silver and platinum is set to impact everyone from jewellery buyers and traders to long-term investors, as the government moves to curb non-essential imports and protect India’s foreign exchange reserves amid the escalating West Asia crisis. 

The move comes just days after Prime Minister Narendra Modi urged citizens to postpone gold purchases, reduce fuel consumption and avoid unnecessary foreign exchange spending in view of the ongoing geopolitical crisis. For consumers, the immediate impact will be higher gold prices and more expensive jewellery purchases. Industry estimates suggest the duty hike could increase gold prices by nearly Rs 27,000 per 10 grams compared to earlier levels.

With import costs rising sharply, industry players expect demand volumes to slow even if the overall value of sales remains high because of elevated prices. The sector is also worried about the possible return of gold smuggling, which had reduced after India cut duties in 2024. For investors, the latest move has already triggered a sharp rally in domestic bullion prices and gold-linked investment products. 

Gold futures on the Multi-Commodity Exchange (MCX) crossed Rs 1.63 lakh per 10 grams on Wednesday, while silver neared Rs 3 lakh per kilogram. At the same time, the government believes the measure is necessary to reduce pressure on India’s external account and conserve foreign exchange reserves, which have come under strain due to rising import costs. 

The Government sources described the decision as a “preventive measure” taken under “extraordinary external conditions.” Also, the government maintains that the duty hike is a calibrated intervention aimed at discouraging avoidable imports while prioritising foreign exchange spending on essential sectors such as crude oil, fertilisers, industrial raw materials, defence and capital goods.