India’s unofficial gold imports have surged more than 1,500% to 50 metric tonnes during the July-September quarter, marking their highest level since 2023, as higher import duties encourage traders to increasingly rely on unofficial channels, according to a report by the World Gold Council (WGC).
Citing estimates from consultancy Metals Focus, the WGC said informal gold inflows rose to 50 tonnes in the third quarter, compared with just three tonnes during the corresponding period last year. However, the report did not specify how these unofficial shipments were estimated.
Higher Import Duty Fuels Illegal Gold Trade
The sharp rise in unofficial gold imports follows the government’s decision to more than double import duties on gold and silver to 15% from 6% earlier this year. The move was aimed at discouraging precious metal imports and containing the country’s widening trade deficit amid elevated energy prices.
However, the higher duties have increased the incentive for traders to bypass official import channels to avoid customs payments. According to the WGC, previous increases in import taxes have also encouraged unofficial gold inflows.
Such shipments generally involve smuggling networks or smaller quantities of gold brought into the country by individuals without paying applicable duties.
India, the world’s second-largest gold consumer, relies heavily on imports to meet domestic demand due to limited local production. Gold continues to hold significant cultural and financial importance for Indian households, with purchases driven by weddings, religious occasions and festivals.
Cash Transactions Without Bills Gain Ground
The increase in unofficial gold imports has also coincided with a rise in cash-based, under-the-counter transactions involving gold and jewellery without formal invoices.
Such transactions make it difficult for authorities to track purchases, monitor bullion movement and ensure tax compliance. They also create an uneven playing field for organised jewellers who follow customs duties, GST requirements and documentation rules.
Buyers opting for purchases without proper bills may also face difficulties in establishing ownership, verifying transaction details and resolving disputes related to purity and weight.
Gold Demand Rises Sequentially But Remains Lower Year-On-Year
According to the WGC report, India’s overall gold demand improved during the July-September quarter, rising 24% sequentially to 162 tonnes. However, demand remained 29% lower compared with the same period last year, reflecting the impact of elevated gold prices on consumer purchases.
Jewellery demand increased 33% quarter-on-quarter to 100 tonnes, supported by seasonal buying and some easing in prices towards the end of the quarter. However, jewellery demand was still 20% lower year-on-year.
Investment demand also showed signs of moderation. Demand for gold bars and coins rose 9% sequentially to 55 tonnes, but remained 40% lower compared with the year-ago period. Meanwhile, gold ETF demand increased to 5.3 tonnes from 3.6 tonnes in the previous quarter.
Gold Prices Fall 6.8% In October, Festive Demand Outlook Uncertain
Gold prices declined 6.8% in October, slipping below the psychologically important $4,000-per-ounce mark, influencing purchasing decisions among consumers and jewellers.
Traditionally, the October-December quarter witnesses stronger gold purchases due to festivals such as Diwali and the wedding season. However, the expected seasonal recovery could remain limited as elevated prices continue to affect affordability.
Jewellers are also exercising caution in their purchases amid expectations of further price corrections.
The WGC expects seasonal buying to support overall gold demand in the fourth quarter, although jewellery volumes could remain under pressure due to high prices. Investment demand, meanwhile, is likely to depend on gold price movements and expectations of further gains.