India, the world's second-largest gold consumer after China, relies heavily on these imports to feed its vast jewellery industry.

India’s gold imports have plummeted by approximately 70 percent, dropping to 25-30 tonnes following the government's decision to raise customs duty from six to 15 percent. This sharp decline, effective since May 13, signals a major shift in domestic market behavior as the nation seeks to manage its precious metal intake.

The move comes amid heightened economic concerns, particularly regarding rising import costs driven by uncertainties in West Asia. Government officials emphasize the need to prioritize foreign exchange reserves for essential imports like crude oil, fertilizers, and industrial raw materials, which directly support economic growth. Prime Minister Narendra Modi has also personally appealed for public restraint, urging citizens to embrace simplicity to reduce unnecessary forex outflows.

India, the world's second-largest gold consumer after China, relies heavily on these imports to feed its vast jewellery industry. While the government aims to curb consumption, the sheer volume of demand remains a central challenge for fiscal management, with gold traditionally accounting for more than five percent of the country’s total import bill.

The impact of the duty hike is complex. While import volumes fell significantly, the value of imports in May surged 34 percent year-on-year to 3.41 billion dollars due to soaring global prices. During April-May, imports grew 60.14 percent to 9.04 billion dollars. Meanwhile, the 2025-26 fiscal year saw a record 71.98 billion dollars in imports, despite a 4.76 percent volume decline.

This fiscal tightening serves as a strategic buffer. By cooling gold demand, the government aims to redirect capital toward economic activities and food security, ensuring that national resources remain focused on long-term sustainability rather than non-essential commodity hoarding.