Gold price jumps 6% as India raises duty to 15% in 2026

What changed in India’s gold and silver import taxes

Gold and silver prices in India spiked on Wednesday after the central government raised import duties on the precious metals. The effective import duty on gold and silver has been increased to 15% from the earlier 6%, according to government orders. The revised structure includes a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess (AIDC). The government notification said the change is effective from May 13.

The basic customs duty on certain categories of gold and silver imports has been raised from 5% to 10%. With AIDC continuing at 5%, the effective import tax moves to 15%. The duty hike immediately raises the landed cost of imported bullion, which tends to feed into domestic pricing in the futures and physical markets.

MCX reaction: gold and silver futures jump sharply

The impact was visible immediately in early trade. Gold futures on MCX jumped ₹9,206, or 6%, to ₹1,62,648 per 10 grams. Silver futures rose ₹16,743, or 6%, to ₹2,95,805 per kg as of 9 am. During the session, the move extended further, with gold futures (June 5) touching an intraday high of ₹1,64,497 per 10 grams, up as much as 7.20% or ₹11,055.

Silver futures (July 3) also rallied strongly, hitting an intraday high of ₹3,01,429 per kg, up as much as 8% or ₹22,367. At around 9:50 am, gold was trading near ₹1,62,728, up 6% or ₹9,286 from the previous close, while silver traded around ₹2,97,655, up 6.66% or ₹18,593.

Physical market cues: Delhi prices rose ahead of the duty move

Ahead of the duty hike, bullion prices in the national capital had already firmed on rupee weakness and geopolitical risk. On Tuesday, gold climbed ₹1,500 to ₹1,56,800 per 10 grams (inclusive of all taxes), from ₹1,55,300 in the previous session, according to the All India Sarafa Association. Silver rose ₹12,000, or 4.53%, to ₹2,77,000 per kg (inclusive of all taxes), from ₹2,65,000.

HDFC Securities’ Senior Analyst for commodities, Saumil Gandhi, attributed the domestic strength to a weaker rupee and steady sentiment. The rupee depreciated 35 paise on Tuesday to close at an all-time low of 95.63 (provisional) against the US dollar, which tends to push up rupee-denominated prices of imported commodities such as bullion.

Why the government raised duties now

The government has linked the decision to pressures on foreign exchange and the external account. The finance ministry said the move is aimed at curbing precious metals imports, reducing the trade deficit, and supporting the rupee amid rising economic pressure due to global events. India imports most of its gold and silver needs, so higher duties are designed to moderate non-essential imports when the import bill is under stress.

The broader context includes elevated crude oil prices, a weakening rupee, and rising import bills linked to the Iran war and tensions in West Asia. Reports also noted that the US-Iran war has been ongoing for 10 weeks and has led to the effective closure of the Strait of Hormuz. India imports 60% of its LPG usage, and 90% of that flow passes through the Strait of Hormuz, adding to foreign exchange concerns when energy logistics are disrupted.

External account stress and policy signalling

The duty action comes amid explicit messaging on conserving foreign exchange. Prime Minister Narendra Modi, on Sunday, called for judicious use of fuel and postponement of gold purchases and foreign travel, among other measures. Chief Economic Advisor V Anantha Nageswaran described the West Asia crisis as a “live balance of payments stress test”, with direct consequences for inflation, the current account, and the exchange rate.

The rupee’s record lows have also been part of the narrative. Separate reports cited levels around 95.75 against the US dollar, reinforcing the idea that policymakers are focused on limiting outflows and stabilising the external account.

Global market signals were mixed

International prices did not mirror the sharp domestic spike, highlighting that the local move was largely tax-driven. Spot gold fell 0.4% to $1,695.99 per ounce, while US gold futures for June delivery rose 0.4% to $1,705.30. Analysts cited stronger-than-expected US inflation data as a factor reducing hopes of US Federal Reserve rate cuts, which can weigh on gold.

Spot silver was reported up 0.2% at $16.71 per ounce in one update, while another data point showed COMEX silver rising 2.28% to $17.54 per ounce. The mix reflected the day’s shifting risk sentiment and macro cues, including uncertainty around the US-Iran conflict.

Demand risks and the smuggling concern

Higher import duties typically raise retail prices and can soften demand, especially in a price-sensitive market. Market participants also flagged the risk that higher duties could revive smuggling, which had reportedly declined after earlier tariff cuts. The government’s intent is to reduce avoidable import demand, but enforcement and compliance outcomes often become a key variable after sharp duty adjustments.

The new 15% structure also represents a significant jump from the prior 6% duty level, increasing incentives for unofficial channels if domestic prices stay at a steep premium to international benchmarks.

Recent measures and import trends in focus

India has taken other steps recently to restrain imports. Authorities introduced a 3% integrated goods and services tax (IGST) on gold and silver imports, after which banks temporarily halted imports for more than a month. Imports later resumed after banks began paying the 3% IGST, but bullion dealers said the latest customs-duty hike could again reduce imports sharply.

Data in the broader coverage also showed the scale of the import challenge: India’s gold imports rose over 24% to an all-time high of $11.98 billion in 2025-26, compared with $18 billion in 2024-25.

Key facts at a glance

What investors and consumers should track next

For bullion buyers, the main near-term variable is how quickly the duty hike passes through to retail quotes and making charges across cities. For traders and jewellery companies, the focus is typically on volumes, inventory restocking behaviour, and the gap between domestic and international prices after the tax change.

On the macro side, the government’s stated objective is to reduce precious metals imports and ease pressure on the trade deficit and the rupee. The next signals may come from import data, rupee movement, and any further notifications on the broader set of gold and silver items covered under customs rules.

Conclusion

Gold and silver surged in India after the government raised effective import duties to 15% from May 13, lifting landed costs and pushing MCX prices up by about 6% in early trade. With the rupee at record lows and West Asia-linked uncertainty pressuring the external account, import moderation has become a key policy lever, and upcoming import and currency data will show how quickly the move changes demand.