India’s Gold Import Shock: How Did Volumes Drop to 25–30 Tonnes After Import Duty Hike?

Gold Imports in India Drop Sharply After Duty Hike: Gold imports in India have declined significantly to around 25–30 tonnes per month from earlier levels of 70–100 tonnes, following an increase in import duty, a government source said on Thursday. The official noted that the policy measure has begun showing results in curbing inflows of the precious metal. “The duty hike is working,” the source said, adding that the decline in gold imports is also being influenced by other factors such as elevated gold prices, weaker jewellery demand, and rising global recycling of gold.

The government had raised the effective import duty on gold from 6 per cent to 15 per cent as part of broader efforts to reduce precious metal imports, ease pressure on foreign exchange reserves, and manage the impact of high import bills. According to the source, this increase has contributed directly to moderating import volumes in recent months.

Import Data Shows Clear Downtrend After Policy Change

Trade data released by the Union Ministry of Commerce indicates that gold imports were valued at around USD 5.63 billion in April 2026, before falling to approximately USD 3.42 billion in May 2026, shortly after the duty hike. The sharp decline reflects both policy impact and changing market conditions. The source said that jewellery demand has also weakened in response to persistently high gold prices, which have reduced retail buying activity. At the same time, recycling of gold has increased globally, adding to the reduced need for fresh imports. “Even in very stable economies, gold recycling has increased. Jewellery which was never recycled is being recycled now,” the source said, highlighting a structural shift in how gold supply is being sourced. The official also noted that reduced imports are not solely driven by consumer demand, but also by broader supply chain adjustments and market behaviour changes in the global gold ecosystem.

Policy Tightening And Shift Away from Formal Import Channels

The source further explained that gold inflows through nominated agencies have declined, as their authorisation for imports was not renewed from April 1. This has led to a visible reduction in official import channels being used for bringing gold into the country. “Nominated agency import is minimised because we have not renewed the import by nominated agencies,” the source said, indicating a deliberate tightening of formal import mechanisms. On earlier attempts at gold monetisation schemes, the source said the government is currently not in favour of reviving such measures, as past efforts faced challenges due to reluctance among people to disclose the source of their gold holdings.

“Gold monetisation was tried a couple of years ago. The challenge was that people did not want to declare how they got the gold and what was the source,” the source added.

The official also commented on the risk of unofficial channels, noting that when financial incentives for diversion are low, the likelihood of gold being routed through informal networks reduces significantly. According to the source, formal import channels remain the preferred route due to their efficiency and lack of meaningful arbitrage opportunities.

“It is still bad to come on a regular channel. Coming on this channel, there is no pay-off in any way. If there is no pay-off, there will be no narcotics,” the source said, emphasizing that limited incentives help keep official trade routes stable.

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