Higher import duty sparked a buying rush across jewellery, ETFs and digital gold in India

Starting May 13, 2026, the basic customs duty on gold was enhanced to 10% (5% earlier). This led to an increase in the overall gold import duty to 15%, which was the rate in 2022. This followed the Prime Minister’s earlier nudge to avoid gold purchases for a year to preserve the country’s foreign exchange reserves, which are strained by hefty oil imports, and also curb the depreciation of the Indian currency.

Indians thronged jewellery shops and rushed to purchase exchange-traded funds (ETFs) and digital gold units through e-commerce platforms, jewellers and refiners, owing to the near doubling of the import duty and associated cess on gold purchases. However, Indian consumers demonstrated their affinity for gold by purchasing it in physical and electronic forms, driven by price sensitivity, low availability and pre-wedding purchases. 

India consumes 700-800 tonnes of gold yearly, 90% is imported from abroad gaining it the second most imported item. This leads to a 9% drain on the exchequer, which totalled $72 billion during the financial year 2025-26. The import duty prices are included by the jeweller in the gold prices, which also fluctuate based on other conditions. One doesn’t separately have to pay the import duty over and above the price of gold paid for the purchase of jewellery or gold coins in physical form. The prices of gold ETFs – offered by mutual funds in India – however, would continue to reprice with a lag to reflect the import duty rise.