The move aims to curb rising imports of precious metals amid strong investment demand, record inflows into gold ETFs and pressure on India’s forex reserves. | Photo Credit: iStockphoto
Macroeconomic and External-Sector Considerations
Officials indicated that customs duty on precious metals has historically been adjusted in response to prevailing macroeconomic and external conditions. During periods of relative stability, when foreign exchange reserves strengthen, customs duties on precious metals may be reduced. For instance, in the Union Budget for 2024-25, customs duties on gold and silver were lowered from 15% to 6%, and on platinum from 15.4% to 6.4%. These reductions reflected a relatively stable macroeconomic and external position at that time.
Conserving Foreign Exchange and Protecting the Current Account
Another official elaborated that the current increase in import duties is part of a broader strategy to conserve foreign exchange and protect the current account. This is critical for prioritizing essential imports and strengthening India’s economic resilience amid changing global uncertainties. “The action is proportionate and represents a national responsibility in response to extraordinary external conditions while maintaining macroeconomic stability and long-term economic resilience,” the official explained.
The ongoing geopolitical situation has resulted in significant volatility in global crude oil markets and international shipping routes. As a major crude oil importer, India faces heightened vulnerability to elevated energy prices and supply disruptions, which could inflate the import bill and pressure the Current Account Deficit (CAD). Effective management of the external sector is therefore essential during these turbulent times, wherein customs duty adjustments serve as a policy tool to support macroeconomic stability.
“India’s foreign exchange resources should be allocated toward essential imports like crude oil, fertilizers, industrial raw materials, defense equipment, critical technologies, and capital goods, which directly bolster economic activity and national security,” said the second official.
Nationwide Economic Discipline
The latest measure aligns with a broader national economic discipline emphasized by the Prime Minister, urging citizens to minimize avoidable foreign expenditure, promote domestic alternatives, conserve fuel, and support national economic stability through responsible consumption practices. In this regard, “moderation in discretionary imports of precious metals can be viewed as a collective effort to strengthen economic stability amidst ongoing uncertainty,” he stated.
Published on May 13, 2026
