India’s gold imports have declined sharply to about 25-30 metric tonnes per month from 75-100 metric tonnes earlier following the increase in import duty, a senior finance ministry official said, attributing the trend not only to higher duties but also to weaker demand.
The official also said that Customs has not notified banks as designated importers of gold from April 1, 2026. As a result, only three nominated agencies, including MMTC, are currently permitted to import gold.
The comments come about a month after the government raised the effective import duty on gold from 6% to 15% on May 13, reversing the duty cut announced in July 2024. The move was aimed at curbing non-essential imports and easing pressure on foreign exchange reserves, the rupee and the current account amid elevated crude oil prices and geopolitical tensions in West Asia. Prime Minister Narendra Modi had also urged citizens to avoid buying gold for a year to help conserve foreign exchange reserves.
“Gold imports are around 25-30 metric tonnes now per month. Earlier, it used to be around 75-100 metric tonnes. But we can only record the quantity that has paid duty. It is not just about quantity. Jewellery demand has also gone down,” the official said.
Banks not notified as importers
The official said imports through nominated agencies have also reduced significantly after the duty increase due to changes in the import authorisation framework.
“As of now, imports through nominated agencies have been minimised. Normally, nominated agencies are re-notified every year. This year, from April 1, the banks have not been re-notified. So, at present, there are effectively no nominated agencies that can import gold except the three nominated agencies including MMTC. Authorised dealer banks are not there.”
Gold smuggling rises
The official, however, cautioned that higher duties and tighter import channels increases enforcement challenges.
“The workload of the DRI is increasing. There is greater pressure. When costs rise, people find other ways,” he said.
The higher import costs has encouraged attempts to bypass formal channels, increasing pressure on enforcement agencies tasked with curbing smuggling and other illicit trade.
Industry pushes gold monetisation
The official said industry stakeholders have again suggested measures to encourage mobilisation of idle domestic gold, but acknowledged that concerns around disclosure and tax scrutiny have historically limited participation in such schemes.
“Many people believe we can recycle domestic gold as well. If no questions are asked, the gold will be disclosed. As long as people think questions will be asked, they will stay away. That has always been the challenge. This has always been the problem with gold monetisation. People did not want to participate because they did not want to declare the source of the gold. The industry has again suggested gold monetisation,” he said.