India's gold imports continue to defy policy efforts to curb demand, with a sharp surge recorded both before and after the government raised import duties in May 2026, according to a report by the think tank Global Trade Research Initiative (GTRI).
Import spikes before and after duty hike
Trade data cited by GTRI shows that gold imports soared 81.7% year-on-year to $5.63 billion in April 2026, just ahead of the government's decision to raise import duties. Even after the revised duty structure took effect on 13 May 2026, imports continued to climb, rising 34% in May to $3.42 billion, compared with $2.55 billion a year earlier.
| Month | Imports ($ billion) | YoY Change |
|---|---|---|
| April 2026 | 5.63 | +81.7% |
| May 2026 | 3.42 | +34% |
Duty structure revised sharply
The duty hike was announced through customs notifications on 12 May 2026 and implemented the next day. It reversed a reduction made in the Union Budget of July 2024, when effective import duties had been cut from 15% to 6%.
Under the revised framework:
- Basic Customs Duty (BCD) increased from 5% to 10%
- Agriculture Infrastructure and Development Cess (AIDC) raised from 1% to 5%
- Including the 3% Integrated GST applied on the landed value plus duties, the total effective tax burden on imported gold now stands at about 18.4%.
| Duty Component | Before Hike | After Hike (13 May 2026) |
|---|---|---|
| BCD | 5% | 10% |
| AIDC | 1% | 5% |
| Effective total | ~6% (post-July 2024) | ~18.4% |
Demand remains resilient despite higher taxes
Despite the steep increase in taxation, gold imports rose 24.1% to $72 billion in FY2025–26, compared with $58 billion in FY2024–25. GTRI notes that the rise in April was particularly sharp, with imports surging before the duty change took effect. Although growth moderated in May, the overall trend still pointed to strong underlying demand.
The report attributes the resilience to a combination of factors:
- Strong jewellery consumption
- Heightened investor interest in safe-haven assets amid global uncertainty
- Elevated international gold prices, which have pushed up the value of imports
Limited impact of policy action so far
The data suggests that while the duty increase has slowed the pace of growth—from 81.7% in April to 34% in May—it has not significantly dampened overall demand. GTRI warns that sustained high imports could continue to exert pressure on India's trade deficit and foreign exchange outflows, particularly at a time of external uncertainty linked to energy price shocks from geopolitical tensions in West Asia.
Country-wise import breakdowns for May 2026 are still awaited. Once released, they are expected to show whether higher duties have shifted sourcing patterns among key suppliers such as the UAE, Switzerland, South Africa, and other major gold-exporting nations.
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