Government Rules Out Increase in Import Duties on Gold and Silver

Government Clarifies No Change in Import Duties on Gold and Silver Amid West Asia Crisis

The Indian government has reassured the public that there are no plans to increase import duties on gold and silver, a government source revealed to Moneycontrol on May 11. This clarification comes in the wake of Prime Minister Narendra Modi's call to Indians to postpone the purchase of gold and foreign travel for one year to conserve foreign exchange.

In a bid to shield people from the adverse impact of the conflict in West Asia, PM Modi on Sunday called for judicious use of fuel, postponement of gold purchases and foreign travel, among other measures, to strengthen the economy. His appeal was aimed at reducing the pressure on India's foreign exchange reserves, which are facing a significant strain due to expensive crude oil imports and a weaker rupee.

The jewellery sector is already feeling the heat, with several stocks experiencing heavy selling pressure on Monday. Sky Gold And Diamonds Ltd fell sharply by 12.24%, while Senco Gold cracked 11%. Other major jewellery companies, including Kalyan Jewellers, Thangamayil Jewellery, Titan Company, Tribhovandas Bhimji Zaveri, and PC Jeweller, also witnessed significant losses on the BSE, with declines ranging from 5.67% to 9.99%.

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The government's move to reduce gold imports is also driven by the country's rising gold import bill. According to data, India's gold import bill touched a record $72 billion in FY26, up sharply from $58 billion in FY25 and nearly double the FY23 level. Despite a decline in gold imports by quantity to around 721 tonnes, global gold prices surged significantly, putting additional pressure on the country's foreign exchange reserves.

Research Analyst Abhinav Tiwari of Bonanza noted that the government sees gold as a discretionary import that can be reduced. The government also wants households to shift their savings towards bank deposits, mutual funds, and bonds, which can help fund economic growth and support the financial system. In the near term, jewellery companies like Titan Company, Kalyan Jewellers, and Senco Gold could see weaker customer demand if people reduce gold purchases. Gold loan NBFCs such as Muthoot Finance and Manappuram Finance may also face some pressure due to slower growth in gold-related activity.