India gold imports hit $72bn in FY26 after duty cut

Austerity appeal as external risks rise

Prime Minister Narendra Modi has asked Indians to adopt austerity measures as tensions in West Asia raise concerns around fuel, fertiliser, and broader import costs. In his remarks, he urged judicious use of fuel, postponement of gold purchases, and foreign travel, with an emphasis on conserving foreign exchange. The appeal comes at a time when gold has become a major pressure point for India’s external balances after crude oil. Economists quoted in the reports linked sustained moderation in gold demand to potential relief for the current account deficit (CAD), the rupee, and foreign exchange reserves. But the immediate backdrop is that India’s gold import bill has surged to record levels even as geopolitical risk has pushed global commodity prices higher.

FY26: Record import bill despite lower volumes

Commerce Ministry data shows India’s gold imports rose 24% to an all-time high of $11.98 billion in FY26. This compares with $18.0 billion in FY25, $15.54 billion in FY24, and $15.0 billion in FY23. The spike in value did not come from a matching surge in physical quantities. The quantity of gold imported fell 4.76% to 721.03 tonnes in FY26, from 757.09 tonnes a year earlier, pointing to the impact of higher prices. Gold remains closely tied to the jewellery industry, and India is the world’s second-largest gold consumer after China.

Prices drove the bill higher

The rise in the import bill was attributed to higher global prices. Commerce ministry data cited in the reports showed the import price rising from $16,617.48 per kg (FY25) to $19,825.38 per kg (FY26). In the domestic market, gold prices in the national capital were reported to be hovering around Rs 1.5 lakh per 10 grams, and another datapoint in the provided material cited Rs 1,51,500 per 10 grams (inclusive of taxes). The reports also noted that gold crossed Rs 1 lakh per 10 grams for the first time in April last year. These price levels helped inflate the import bill even when tonnage did not rise.

Trade deficit and current account: why gold imports matter

Higher gold imports increase foreign exchange outgo and can widen the trade deficit. The rise in imports pushed India’s trade deficit to $133.2 billion in FY26, according to the article. In another period snapshot, the trade deficit was $110.60 billion during April to February 2025-26, compared with $161.80 billion in the corresponding period a year earlier. The reports also pointed to a widening in the current account deficit in the December quarter: India’s CAD rose to $13.2 billion (1.3% of GDP) from $11.3 billion a year earlier, with the higher trade deficit cited as a key driver.

Gold’s share in India’s import basket

Gold accounts for a meaningful slice of India’s total imports. One section said the precious metal makes up over 9% of India’s total imports, while another cited roughly 8-10% of the merchandise import bill. India’s total imports in FY26 were reported at $175 billion. Economists also described gold as one of India’s biggest import concerns after crude oil, particularly at a time when Brent crude was cited as having surged above $105 per barrel amid geopolitical tensions. The reports reiterated that India imports more than 85% of its crude oil requirements, amplifying vulnerability when both oil and gold prices are elevated.

Where India buys its gold from

The sourcing mix is concentrated. Switzerland was cited as the largest source of gold imports, with about 40% share, followed by the UAE (over 16%) and South Africa (about 10%). The report also stated that total merchandise imports (including gold) from Switzerland rose 11.36% to $14.27 billion during FY26. Separately, GTRI flagged that tariff concessions under the India-UAE trade deal have contributed to the surge in imports routed through Dubai.

Policy moves: duty changes, restrictions, and FTA concerns

India has used import duties and import rules to manage bullion flows. In 2022, India hiked gold import duty to 15% from 10.75% to check the current account deficit and rising imports. In the Budget for 2024-25, the duty was reduced to 6%, with the stated aims of supporting the domestic gems and jewellery industry, curbing illegal smuggling, and easing local prices. The government also imposed import curbs on articles of gold, silver, and platinum to check misuse of free trade agreements, including instances where imports were allegedly routed as “unstudded jewellery” to benefit from duty differentials.

India-UAE CEPA: TRQ benefit and Dubai-linked surge

The India-UAE Comprehensive Economic Partnership Agreement (CEPA) came into force in May 2022. Under its Tariff Rate Quota (TRQ) system, India allowed gold imports from the UAE at tariffs one percentage point lower than normal import duties. The quota started at 120 tonnes annually and is set to rise to 200 tonnes from 2027, covering nearly 25% of India’s gold imports, according to the article. GTRI said the benefit grew after the normal import duty was cut to 6%, making the effective duty on gold from Dubai 5%, as per GTRI founder Ajay Srivastava. Reported data showed India’s gold bar imports from the UAE rising from $1.9 billion (2022) to $1.7 billion (2023) and $16.5 billion (2025).

Market and operational signals: ETFs and monthly swings

The material also described how financial demand can translate into physical imports. One section cited a month where gold imports rose from $1 billion in December to $12 billion in January, and linked this to record inflows into gold ETFs. It cited Rs 24,000 crore invested in gold ETFs, noting that such ETFs must be backed by physical gold. Separately, RBI Governor Sanjay Malhotra was quoted saying merchandise exports contracted 0.2% in the first two months of the year while imports grew more than 22%, largely driven by higher gold imports, widening the trade deficit.

Key numbers at a glance

Why the story matters

The data underscores a policy dilemma. Gold is deeply embedded in household savings behaviour and jewellery demand, but it also creates a large, recurring foreign exchange outflow. The FY26 record import bill, combined with a higher trade deficit and a wider December-quarter CAD, explains why official messaging has turned to conserving foreign exchange. It also explains why think tanks such as GTRI are urging a review of tariff concessions under FTAs, especially as lower duties can amplify import demand when prices rise.

Conclusion

India’s gold import bill reached $11.98 billion in FY26, driven mainly by higher prices even as volumes fell. With external risks rising and crude oil prices elevated, policymakers are again focusing on import compression through appeals, duties, and tighter import rules. The next set of signals to track will be any follow-through on reviewing FTA-linked concessions, and whether the moderation in monthly import volumes sustains alongside high domestic prices.