Gold Import Duty Hiked to 15%: What Changes for Prices, Demand, and Investors in India

If you follow gold prices even casually, Wednesday, May 13, 2026 was a day you noticed. The Government of India raised the effective import duty on gold and silver to 15% — more than doubling it from the 6% rate that had been in place since July 2024. MCX gold contracts jumped nearly 6% in a single session, crossing ₹1,62,000 per 10 grams. Jewellery stocks bled. And across markets, one question started doing the rounds: what exactly has changed, and what does it mean going forward?

Breaking Down the New Gold Import Duty Structure

The revised structure is straightforward. Under the earlier regime — set by the Union Budget of July 2024 — gold and silver imports attracted a 5% Basic Customs Duty (BCD) and a 1% Agriculture Infrastructure and Development Cess (AIDC), totalling 6%. The government has now raised BCD from 5% to 10% and AIDC from 1% to 5%, taking the total effective import duty to 15% — applicable from May 13, 2026.

For context, this is not the first time India has been at 15%. The same level was in force in 2022 when the government raised duties to arrest rupee depreciation amid the Russia-Ukraine war. In the Union Budget of July 2024, duty was sharply cut to 6% with dual objectives — support the gems and jewellery export sector, and discourage gold smuggling, which had been rampant when duties were elevated. That cut worked on smuggling but, as data shows, it also lit up official imports.

Why Did the Government Act Now? The Macroeconomic Pressure Behind the Move

India's average monthly gold import climbed to 83 tonnes in the first two months of 2026, up from an average of 53 tonnes across 2025, according to the World Gold Council. In value terms, India's gold demand nearly doubled year-on-year in Q1 FY27, hitting a record $25 billion. For the full financial year 2025-26, India's gold import bill surged over 24% to an all-time high of $71.98 billion. The Indian rupee hit record lows around ₹95.6–95.7 against the US dollar on May 13.

Rising crude oil prices, driven by the ongoing West Asia conflict, have compounded the pressure. 

Impact on Domestic Gold Prices and MCX

The price impact was immediate. Spot gold in Mumbai's spot market opened at ₹1,60,411 per 10 grams on May 13, sharply higher from ₹1,51,954 at the previous close, per IBJA data. MCX gold futures surged 7.2% to hit an intraday high of ₹1,64,497 per 10 grams — a single-session jump of over ₹11,000 — before settling around ₹1,62,500. Silver on MCX similarly surged over 6%, briefly reclaiming ₹3 lakh per kg.

The mechanics are simple: higher import duty increases the landed cost of bullion, and MCX prices — which factor in the international price, USD/INR rate, import duty, and domestic premiums — adjust immediately. Even if global COMEX gold prices remain flat, domestic prices can rise purely due to the duty component. 

Jewellery Sector: Near-Term Pain, Organised Players May Gain

The India Bullion and Jewellers Association (IBJA) has been candid. Surendra Mehta, National Secretary of IBJA, warned that overall gold demand could drop by nearly 10%, with the jewellery segment alone potentially seeing a 5–7% decline. According to data cited by the World Gold Council, a 1% increase in import duty is associated with a reduction of approximately 6.4 tonnes in consumer gold demand — which gives some scale to what a 9-percentage-point hike could mean.

Jewellery stocks reflected that anxiety. Titan Company traded flat with a negative bias at ₹4,053 on NSE. Kalyan Jewellers India fell as much as 5.87% to ₹340.55. Senco Gold and Thangamayil Jewellery also saw selling pressure. That said, analysts point out that large organised retailers like Titan and Kalyan are better positioned to ride this out — they have stronger inventory management, better hedging capabilities, and tend to gain market share from smaller unorganised players during periods of sharp price volatility.

The Smuggling Risk the Government Cannot Ignore

Here is the tension at the heart of this policy move. One of the explicit reasons the government cut gold import duty to 6% in 2024 was to bring illegal gold trade back into formal channels. It worked — smuggling cases had eased noticeably. Now, with duties back at 15%, industry officials are warning that the arbitrage opportunity for smugglers has returned. Historically, every time India's import duty has crossed a certain threshold, illicit trade picks up — and that gold, of course, never shows up in the trade deficit numbers.

What This Means if You Are Invested in Gold

For existing gold holders — whether physical, ETF, or digital — the duty hike is a near-term price tailwind. Domestic gold prices are likely to trade at a higher premium over international prices until demand adjusts. For fresh buyers, the question is whether prices are already reflecting the full duty impact or if there is more to come.

Over the medium term, lower official imports should ease CAD pressure and provide some support to the rupee — which is positive for the broader equity market, even if not for gold demand itself. Investors should also watch whether global gold prices on COMEX correct, which could offset some of the domestic duty-driven premium.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Commodity and equity markets are subject to market risks. Please conduct independent research or consult a SEBI-registered investment advisor before making any financial decisions.