PM Modi’s Gold-Buying Appeal: What the 15% Import Duty Means for India’s Gold Imports

Prime Minister Narendra Modi’s renewed appeal to Indians to avoid unnecessary gold purchases has put the spotlight on the country’s large gold import bill and the economic impact of consumer demand for the precious metal. The latest appeal comes after India introduced a significant increase in the import duty on gold and silver earlier this year.

India remains one of the world’s largest gold consumers and depends heavily on overseas supplies to meet domestic demand. With a substantial quantity of gold already held by households, the government is looking for ways to reduce fresh imports while encouraging existing stocks to be put to more productive use.

Gold imports declined after May

Data from Metals Focus, the primary external research provider of the World Gold Council, indicates that India's gold imports weakened after Modi made a similar appeal in May.

Imports stood at 29.4 tonnes in May, compared with 30.6 tonnes in the same month a year earlier, representing a decline of nearly 4%. The contraction became more pronounced over the following months.

Gold imports fell by around 20% in June, 23.7% in July and nearly 30% in August, according to the data cited by Economic Times.

However, the figures do not necessarily establish that the Prime Minister's appeal alone caused the decline. Other factors, including higher import taxes and elevated international gold prices, have also influenced buying patterns.

Import duty rises sharply

One of the most important changes affecting India's gold market came in May, when the government increased the customs duty on gold and silver from 6% to 15%.

The revised structure includes a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess, taking the effective import tax on gold and silver to 15%. The government said the measure was intended to moderate non-essential imports, conserve foreign exchange and reduce pressure on the external account.

The higher duty effectively increases the cost of bringing gold into India. Combined with elevated international prices, this creates a stronger financial incentive for consumers to postpone purchases or explore alternatives such as exchanging existing jewellery.

The year began with strong import growth

India's gold import pattern in 2026 has not been consistently weak. Imports were exceptionally strong during the first two months of the year.

January imports jumped 171.6% year-on-year to 99.4 tonnes, compared with 36.6 tonnes in January of the previous year. February also recorded a substantial increase, with imports more than doubling to 66 tonnes from 30.8 tonnes.

The momentum subsequently weakened. March imports fell 34.9% year-on-year to 32.9 tonnes, while April recorded a 30.7% increase to 45.6 tonnes.

The sharp movements highlight how sensitive India's gold demand can be to prices, taxes, consumer sentiment and seasonal buying patterns.

Why the government wants gold imports lower

Gold occupies a special position in India's economy and culture, but much of the country's domestic requirement is met through imports. India typically imports around 700-900 tonnes of gold annually, making the metal one of the country's largest import categories.

When international gold is purchased, foreign currency is required to pay overseas suppliers. A sustained reduction in gold imports can therefore help reduce pressure on India's trade balance and current account.

The government is also interested in mobilising the enormous amount of gold already owned by Indian households. Estimates put household gold holdings at around 31,000 tonnes. Much of this wealth remains outside the formal financial system, prompting policymakers to explore ways of bringing some of it into circulation.

Jewellery exchange could become more important

The government's appeal does not necessarily mean consumers will stop buying jewellery altogether. Instead, purchasing behaviour could shift.

Consumers may increasingly exchange old jewellery for new designs rather than buying additional gold outright. This allows households to participate in weddings, festivals and other traditional occasions without necessarily adding the same amount of fresh gold to their holdings.

The trend is particularly relevant for the jewellery industry ahead of the festive season. Industry participants have already indicated that exchanges could account for a larger share of business as consumers become more cautious about spending on newly purchased gold.

September could provide another signal

The impact of Modi's latest appeal will be closely watched through September. The India Bullion & Jewellers Association expects gold imports to decline by about 15% during the month.

If that projection materialises, it would reinforce the evidence that India's gold import demand is moderating. However, separating the impact of government messaging from other factors such as taxation, gold prices and broader economic conditions will remain difficult.

For now, India's gold market is entering a period where consumers, jewellers and policymakers are adjusting to a combination of high prices, increased import costs and calls for more restrained purchases. The coming months will show whether this translates into a sustained reduction in India's dependence on imported gold or simply a temporary shift in the timing and form of consumer demand.