Gold Import Tax Hike May Distort Markets and Fuel Smuggling, Warns Consumer Group
New Delhi, 14 May 2026 – The government has raised import duties on gold and silver to 15% from 6% as part of efforts to curb non-essential imports, ease pressure on foreign exchange reserves, and support the rupee amid ongoing geopolitical tensions in West Asia.
Responding to the move, the Consumer Choice Center (CCC) cautioned that steep import taxes on precious metals risk distorting legitimate markets, reviving smuggling, and expanding grey-market trade.
The duty hike comes as India faces rising import costs linked to elevated global crude oil prices and broader geopolitical instability. While the measure is intended to reduce pressure on the current account deficit and stabilize the currency, CCC warns that sharp import barriers have historically created unintended consequences across the bullion market.
Shrey Madaan, Indian Policy Associate at the Consumer Choice Center, said:
“Using steep import duties to manage currency pressure may appear effective in the short term, but history shows such measures often push demand into informal channels instead of reducing it.”
Industry representatives have already raised concerns that higher import taxes could encourage smuggling and contribute to the growth of a parallel economy. India remains one of the world’s largest gold consumers, with domestic demand heavily dependent on imports.
CCC notes that higher duties are likely to increase jewelry prices, widen the gap between legal and illicit markets, and place additional pressure on genuine businesses operating within the formal economy.
“Market distortions rarely eliminate demand; they usually redirect it,” Madaan added. “When legal imports become more expensive, informal trade becomes more attractive, undermining transparency and hurting formal businesses.”
The organization also cautions that relying on import restrictions to stabilize the rupee risks addressing short-term symptoms rather than the underlying structural economic pressures.
CCC emphasizes that sustainable economic stability depends on transparent and predictable policies that strengthen market confidence without incentivizing illegal trade or distorting consumer behavior.
“Protecting economic stability should not come at the cost of expanding grey markets and weakening commerce,” Madaan concluded.