Post PM's Call for Austerity, India Gets its First Price Hike: Import Duty on Gold and Precious Metals Hiked

Udaipur, May 13, 2026: The Prime Minister’s recent call for austerity may now be beginning to reflect in policy decisions, with Indians facing the first major price impact linked to the prolonged conflict in West Asia involving the US and Israel.

In a significant move, the government has sharply increased the effective import duty on precious metals. Gold and silver imports will now attract an effective duty of 15%, up from 6%, while platinum imports have become costlier too, with duties rising from 6.4% to 15.4%.

Easing Pressure on Foreign Reserves

The Prime Minister’s recent call for austerity may now be beginning to reflect in policy decisions, with Indians facing the first major price impact linked to the prolonged conflict in West Asia involving the US and Israel.

In a significant move, the government has sharply increased the effective import duty on precious metals. Gold and silver imports will now attract an effective duty of 15%, up from 6%, while platinum imports have become costlier too, with duties rising from 6.4% to 15.4%.

Market Impact

The decision is unlikely to leave the market untouched.

Jewellery companies such as Titan Company, Kalyan Jewellers and Sky Gold & Diamonds could face some pressure as rising gold prices may dampen consumer sentiment, particularly for discretionary purchases like jewellery, medallions and coins. For buyers already dealing with inflationary pressures, festive or wedding shopping could become noticeably more expensive.

At the same time, not everyone in the sector stands to lose. Gold financing companies such as Muthoot Finance and Manappuram Finance may benefit, as higher gold prices generally increase the collateral value of gold-backed loans. Reflecting market sentiment, precious metal futures on the Multi Commodity Exchange of India reportedly jumped nearly 6% after the announcement.

Smuggling

There is, however, another concern quietly resurfacing — smuggling.

Industry observers warn that a steep increase in duties may once again make illegal channels attractive. Gold smuggling had eased considerably after tariff cuts in 2024, but with domestic prices expected to rise sharply again, fears of a comeback are growing.

The timing also matters. Gold demand has already been gaining momentum as investors, disappointed by weaker equity returns and encouraged by soaring bullion prices, increasingly turn to the metal as a safer bet during uncertain times.

For now, there is little expectation that the higher duty will be rolled back anytime soon. Even if tensions in West Asia cool, the ripple effects on oil prices and global supply chains are unlikely to disappear overnight. And with hopes of a lasting ceasefire still uncertain, relief may not come quickly.