Indian Gold Imports Plummet to Near Three-Decade Low Amid Tax Obligations

India's Gold Imports Set to Fall to Near 30-Year Low

India's gold imports for April are expected to reach a near 30-year low of around 15 metric tons, according to industry and government sources. This decline is attributed to an unexpected tax demand imposed on banks by Indian customs, which has halted shipments of refined gold. Banks, which import most of India's refined gold, have suspended imports since the tax demand was made.

The 3% integrated goods and services tax (IGST) on gold imports was initially exempted for gold-importing banks in 2017 when India adopted the IGST. However, a delay in issuing a formal government order authorising bullion imports by banks has led to the imposition of the tax demand. As a result, banks have not cleared any gold from customs this month, with only a small quantity cleared via the India International Bullion Exchange (IIBX).

India, the world's second-largest gold consumer, imported 35 tons of gold in April 2025 and averaged about 60 tons a month in the 2025-26 fiscal year to March. The 15-ton figure for April is the lowest for the month in around three decades, excluding 2020 when the COVID-19 pandemic forced Indian jewellery shops to close. This decline could weigh on global gold prices.

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India likely spent about $1.3 billion on gold imports in April, well below the monthly average of $6 billion in the last fiscal year. Despite Indians celebrating Akshaya Tritiya, the second-biggest gold buying festival after Dhanteras, on April 19, banks had anticipated this demand and imported gold, which is now lying in vaults. About 8 tons of gold is parked in vaults, awaiting clearance from customs officials.

The GST demand on gold, along with the earlier delay in authorising banks to import bullion, may be aimed at slowing gold imports to help narrow the country's trade deficit and support the rupee, which has been one of the worst-performing Asian currencies so far this year. Imports of gold dore, a semi-pure alloy, were also hit hard in April as refiners struggled with the government rejecting or deferring new import licence applications.