India's Gold Imports Crash 27% Following Duty Hike
India's gold imports dropped to USD 19.27 billion in the first half of 2026 following a significant hike in import duties on precious metals.
India has witnessed a massive slump in precious metal inflows, with gold imports falling by over 27 per cent during the first half of the 2026 fiscal year. According to the latest data released by the Ministry of Commerce and Industry, the value of gold brought into the country plummeted to USD 19.27 billion between April and September 2026, a sharp contrast to the USD 26.51 billion recorded during the same period the previous year.
The Impact of Higher Import Duties
The primary driver behind this significant contraction appears to be the government's decision to make precious metals more expensive. In May 2026, the customs duty on both gold and silver was hiked from 6 per cent to 15 per cent. This policy shift, effective from May 13, was aimed at moderating imports to protect the rupee and manage foreign exchange reserves.
The World Gold Council had previously anticipated that these higher duties, coupled with stricter import regulations, would exert downward pressure on domestic demand throughout 2026. The recent figures suggest those predictions are coming to fruition.
September Trends and Trade Deficit Relief
The Ministry's report highlighted a notable trend during the month of September, showing a sharp decline in gold imports. Silver imports also saw a reduction, both on a monthly and cumulative basis. This cooling of the precious metals market is seen as a strategic move to address India's economic stability:
- Trade Deficit Mitigation: As India relies heavily on overseas markets to satisfy its massive domestic gold demand, lower import volumes help ease the pressure on the merchandise trade deficit.
- Import-Export Dynamics: While precious metal imports slowed, India's overall merchandise imports actually rose to USD 74.61 billion in September, up from USD 69.08 billion a year earlier.
- Export Growth: On a positive note, merchandise exports surged by 23.04 per cent to USD 44.40 billion in September.
This combination of rising exports and falling gold imports helped narrow the merchandise trade deficit to USD 30.21 billion, compared to USD 33 billion in the previous year. While the exact extent to which the duty hike caused the fall is still being analyzed, the data clearly indicates a major shift in India's precious metal import landscape.