TNI Bureau: The government has substantially increased the customs duty on gold, silver, and other precious metals, a significant economic measure designed to curb import growth and safeguard foreign exchange reserves. This adjustment elevates the effective import duty from 6% to 15%, consequently making the importation of jewelry and bullion considerably more expensive.

Under the revised regulations, a 10% Basic Customs Duty (BCD) is now levied, supplemented by a 5% Agriculture Infrastructure and Development Cess (AIDC) on imported gold and silver. This increased duty structure also extends to platinum and various other precious metal commodities.

This policy change occurs amidst considerable economic challenges for India, including the ongoing Middle East crisis, high crude oil prices, and a depreciating rupee. Authorities anticipate that this move will deter non-essential imports and contribute to narrowing the current account deficit.

As one of the world’s foremost gold importers, India relies heavily on international supply to satisfy domestic demand. Reports indicate that gold imports reached unprecedented levels in the current financial year, further depleting foreign exchange reserves.

This customs duty increase is viewed as a component of a wider strategy to conserve foreign exchange and stabilize the economy, aligning with Prime Minister Narendra Modi’s recent call for citizens to limit non-essential gold purchases and embrace austerity given global economic uncertainties.

Nevertheless, industry professionals express concern that this sharp duty hike could adversely affect jewelry demand, particularly during the forthcoming festive and wedding periods. Furthermore, analysts caution that a significant increase in duties might reignite gold smuggling, an issue that had previously diminished following reductions in import taxes.