Gold import duty at 15%: Rupee, CAD steps 2026

Rupee slide puts focus back on the external account

India’s sharp rupee depreciation against the US dollar has pushed policymakers to revisit import curbs and other measures meant to reduce dollar outflows. Commerce and industry minister Piyush Goyal said the government is monitoring the situation and that multiple arms of the government are working together. He added that several steps are under consideration to contain the widening current account deficit (CAD). The context is a mix of high import bills and currency pressure, with the rupee cited at record-low levels around 95.71 to 95.85 per US dollar in the reports.

What Piyush Goyal said on steps under consideration

Goyal’s remarks indicate a coordinated approach rather than a single-action response. He specifically pointed to measures that discourage imports, including higher duties on precious metals and tools like Quality Control Orders (QCOs). The government has also acted within existing export-import schemes to reduce leakage and unneeded inflows. While the minister did not outline a full package, the statements align with the broader aim of containing the CAD by reducing non-essential imports and limiting dollar outflow.

Import duty hike: gold, silver, and platinum

A key move has been the increase in import duties on precious metals. The basic import duty on gold was raised to 15% from 6%, and the same 15% rate was applied to silver. Platinum’s import duty was raised to 15.4% from 6.4%. The duty hikes were reported as effective May 13.

In one of the cited structures, the duty change was described as a 10% basic customs duty plus an additional 5% tax, taking the overall levy to 15%. Separately, the policy rationale is to make bullion imports more expensive and thereby deter demand, particularly when the rupee is weak and the import bill is already elevated.

Effective tax impact: IGST pushes the landed cost higher

Beyond the basic duty, the government also highlighted the impact of indirect taxes. With 3% IGST, the effective duty on gold imports was stated at 18.45%. This matters for the domestic market because higher landed costs typically transmit quickly to wholesale bullion prices and then to retail jewellery pricing. Motilal Oswal and ICICI Securities were cited as flagging a sharp “price shock” for the domestic jewellery market following the hike.

Why bullion is in focus: import data shows a surge in value

The policy response comes after a jump in the value of precious metals imports.

• Gold imports rose 24% to an all-time high of USD 72 billion in the last financial year, even as volumes fell 4.8% to 721 tonnes.
• Silver imports surged 150% to USD 12 billion, with volumes rising 42% to 7,335 tonnes.

The combination of higher global prices and strong domestic demand can keep the import bill elevated even when physical volumes soften. That is a core challenge for policymakers attempting to manage the CAD through import disincentives.

Additional restrictions: Advance Authorisation cap and QCOs

The government also tightened the Advance Authorisation scheme route for gold. Under this scheme, jewellery exporters can import raw materials at zero duty, but a limit of 100 kg on gold imports was imposed. The stated purpose is to reduce misuse and overall inflows while preserving the scheme’s export-support intent.

Goyal also pointed to Quality Control Orders (QCOs) as another lever to discourage imports. QCOs can restrict the inflow of products that do not meet specified standards, and they can be used as a non-tariff method to reduce import dependence in select categories.

Macro backdrop: crude, conflict, and CAD thresholds

An SBI report was cited describing the duty hike as a direct response to the widening CAD. The report also linked the external stress to energy prices, noting Brent crude trading above USD 105 amid the West Asia conflict. Since crude oil is India’s largest import and gold is described as the second-largest import after crude oil, the combination can amplify pressure on the trade deficit and the currency.

SBI’s framing of the gold duty hike as a “mechanical necessity” reflects a view that higher import costs may deter physical demand and help prevent the CAD from crossing a sustainable 2.5% of GDP level.

Market impact: what the duty hike can and cannot do

Brokerage commentary included a caution that higher duties may not materially stabilise the rupee or sharply narrow the CAD if global bullion prices remain elevated and demand is relatively inelastic. One report noted the rupee’s sensitivity to oil prices and capital flows, implying that import curbs alone can offer only limited support.

Another element highlighted was RBI activity: it was reported that the RBI has intervened in spot and forward markets. Additional measures were also discussed in the context of attracting inflows, including the possible use of state-run lenders to issue foreign currency bonds.

What Nomura expects next: LRS and diaspora bond options

Nomura expects more policy announcements in the coming weeks and months, following Prime Minister Narendra Modi’s appeal to conserve energy and foreign exchange. Potential measures mentioned include tighter rules under the Liberalised Remittance Scheme (LRS), which currently allows residents to remit up to USD 250,000 abroad annually. Nomura also flagged a diaspora bond as a possible tool to mobilise foreign currency deposits.

Nomura estimates the balance of payments could be tracking at a deficit of over USD 70 billion in FY27. In this backdrop, the brokerage characterised the customs duty hike on gold and silver as part of a broader attempt to narrow the CAD and reduce pressure on the rupee.

Key facts at a glance

Conclusion: a mix of import curbs and inflow measures in focus

The duty hike on gold and silver to 15% and the higher levy on platinum are among the government’s most visible steps to curb non-essential imports as the rupee weakens. The measures are designed to reduce dollar outflows and help manage the CAD, alongside administrative curbs such as the 100 kg cap under Advance Authorisation and the use of QCOs. With analysts also pointing to oil prices and capital flows as key drivers, the next phase is likely to include additional steps aimed at conserving foreign exchange and mobilising inflows, including options Nomura flagged around LRS tightening and diaspora bond issuance.