Editor’s Note
India is reportedly considering higher import tariffs on gold and silver in the coming weeks, as policymakers seek to curb record-high imports of these precious metals. The move follows a surge in import values in 2025, despite soaring global prices, highlighting concerns over trade imbalances and the lack of effective control measures.
In 2025, India’s imports of gold and silver surged to record highs, raising concerns among policymakers. Despite precious metal prices repeatedly hitting record peaks, these imports have remained robust, while the Indian government lacks effective control measures.
Last year, international gold and silver prices both reached historic highs. India’s gold import value rose 1.6% year-on-year to $58.9 billion, while silver import value jumped 44% to $9.2 billion.
India is the world’s second-largest gold consumer and the largest silver consumer market. However, its gold demand is almost entirely dependent on imports, and over 80% of its silver demand relies on overseas supply.
In 2025, India’s spending on gold and silver imports accounted for nearly one-tenth of its foreign exchange reserves. As precious metal prices continue to rise, the import bill for 2026 is expected to climb further.
The expanding import scale has widened India’s trade deficit and put pressure on the Indian rupee, which hit a record low this month.
Silver is widely used in industrial sectors such as solar energy and electronics, while gold’s primary uses are in jewelry making and investment. The Indian government categorizes gold demand as non-essential and has repeatedly attempted to curb gold consumption by raising import tariffs to increase purchase costs for consumers.
Current gold and silver prices have reached historic highs. Even if import volumes remain unchanged, import values could increase significantly, exacerbating concerns about a widening trade deficit and further rupee depreciation. The rupee has already experienced a sharp decline against the US dollar.
Between 2012 and 2013, to stabilize the rapidly depreciating rupee at the time, the Indian government significantly increased gold import tariffs. Now, with the rupee weakening again, traders speculate that the government may reinstate tariff hikes in the coming weeks, reversing the 2024 tariff reduction. At that time, to curb smuggling, India lowered import tariffs on both gold and silver from 15% to 6%.
The market has already priced in the possibility of a tariff increase. Currently, domestic gold and silver trading prices in India are at a premium compared to international benchmark prices.
Before 2023, jewelry demand accounted for over three-quarters of India’s total gold demand. From the beginning of 2025 to now, international gold prices have risen by 98%. While this has impacted Indian jewelry consumption, growth in investment demand has supported overall demand, preventing a sharp decline.
Indian citizens are increasingly purchasing gold coins and bars in the spot market, while the number of investors choosing Gold Exchange Traded Funds (ETFs) continues to grow. In 2025, inflows into Indian gold ETFs surged 283% year-on-year to 429.6 billion Indian rupees (approximately $4.69 billion), a record high. Consequently, India’s gold investment demand accounted for over 40% of total consumption in 2025, a proportion expected to rise further in 2026.
Gold and Silver Exchange Traded Funds are investment funds listed and traded on stock exchanges, similar to stocks. Their assets are backed by physical gold and silver bars stored in secure vaults.
India has previously attempted multiple times to curb gold imports by raising tariffs, with limited success. In August 2013, the Indian government raised the gold import tax from 2% to 10%. Despite the tariff increase, gold demand remained stable.
The domestic gold price in India has risen from about 8,000 rupees per 10 grams in early 2006 to about 162,000 rupees today. However, the continuous sharp rise in gold prices has not significantly suppressed annual demand. In 2025, Indian gold prices surged by 76.5%, yet the market absorbed this increase. Therefore, even if tariffs are raised by another 4 to 6 percentage points, it is unlikely to deter consumer purchasing intent.
However, a tariff hike could increase investor returns and exacerbate gold smuggling. In recent months, inflows into gold exchange-traded funds have been strong and are expected to remain robust. Against a backdrop of weak equity market returns, investors are turning to gold assets.
If gold prices experience a significant decline, gold investment demand may weaken. However, consumers who have been holding cash waiting for a price correction will return to the market, boosting jewelry consumption demand.
Silver price increases have outpaced those of gold, driving up India’s silver import expenditure. Until last year, India’s silver demand was primarily driven by growth in industrial consumption. However, in recent months, investment demand has become the main force supporting silver imports.
In 2025, inflows into Indian silver exchange-traded funds reached 234.7 billion rupees, compared to only 85.69 billion rupees in 2024. The growing popularity of silver ETFs means that if silver prices continue to rise, India’s silver imports for investment purposes may increase further.