Within 24 hours of Prime Minister Narendra Modi’s appeal to citizens to avoid buying gold for a year, the Central Government has taken a major step by increasing customs duty on precious metals, gold, platinum and silver imports. According to the Central government, the move is aimed at protecting the country's macroeconomic stability and conserving foreign exchange reserves at a time of rising West Asia war.
The government has decided to raise the import duty on gold and silver from 6% to 15%, while the duty on platinum metal increased 6.4% to 15.4%. The revised duty structure includes a 10% basic customs duty along with a 5% cess on imports of precious metals. Including the Agriculture Infrastructure and Development Cess (AIDC), the total customs duty now stands at 15%.
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With this decision, importing gold, silver and other precious metals into India will become more expensive, which is expected to directly impact domestic market prices.
According to the government, the primary objective behind the move is to reduce pressure on foreign exchange reserves by curbing gold imports and preventing further depreciation of the rupee.
India is one of the world’s largest consumers of gold, and the government believes the higher duty will help reduce the volume of imports.
However, some officials have also expressed concerns that the sharp increase in customs duty could lead to a rise in illegal smuggling of precious metals. Smuggling cases had reportedly declined after the government reduced customs duty from 15% to 6% in the 2024 Budget.
The earlier reduction in import duty had led to a record rise in gold and silver imports. With the latest decision, customs duty has now returned to the pre-Budget 2024 level.