India raises gold, silver import duty. What does it mean for the buyers and falling rupee?

After Prime Minister Narendra Modi on Monday (May 11) urged citizens to avoid buying gold for a year, the government has increased the import duty on gold and other precious metals. The orders will take effect from today. The Ministry of Finance on Wednesday (May 13) under Customs Notification No. 16/2026 said that Gold and Silver findings will attract 5 percent duty, while platinum findings will attract a 5.4 percent duty. The effective import duty on gold and silver has now shot up from from 6 per cent to 15 per cent.

The measure is being taken to try and bring down ​overseas purchases of the metals and ease pressure on ⁠the country’s foreign exchange reserves.

What does this mean for the Indian buyers and economy?

The higher duties could lead to lower demand of the metal in the world’s second-largest consumer of gold. On the hindsight it may help scale own India’s trade ‌deficit and support the rupee that has not been performing well in the last few months.

Notably, India does not produce gold and most of its demands are met through imports, which are paid for in US dollars.

In 2025-26, gold imports made up 9-10 per cent of India's total import bill. It cost the state exchequer $71.98 billion (a record) to import gold and meet domestic demand.

But India's forex reserves have dropped due to Middle East tensions and rising crude oil prices. Also, the International Monetary Fund (IMF) IMF projects a wider current account deficit (CAD) if the war continues.

So, the move of increasing import duty on gold and other precious metals is being seen as a pre-emptive steps to save its forex reserves.