New Delhi: After PM Modi requested the public to avoid unnecessary purchases of gold and silver, the government has taken concrete action by doubling the import duties on gold and silver from 6% to 15% effective immediately.
According to notifications by the Finance Ministry on May 12, the import tax on gold and silver totals almost 18.4% now.
This abrupt increase comes at a time when India has had to curtail non-essential imports given the increasing pressure on our finances following the unending blockade of the Strait of Hormuz affecting global oil supplies.
Macroeconomic Urgency
This aggressive tariff hike comes as a complete U-turn from the 2024-25 budget, where the government had cut gold duties to 6% in an effort to support the jewellery industry workforce and dismantle smuggling networks.
Further data have revealed that India’s gold imports have surged 24% to a record $71 billion on surging demand, irrespective of soaring global prices.
For the government, this move comes when essential imports have become prohibitively expensive, with state-run oil marketing companies (OMCs) losing more than Rs.1,000 crores daily even as prices remain unchanged while global oil prices surge dramatically.The government now aims to prioritize paying for essential imports like crude oil, fertilizers and defence equipment over non-productive bullion or luxury goods.
