India has increased the import duty on gold and silver from 6 percent to 15 percent, effective from Wednesday, according to a government order cited by Reuters. The move aims to reduce pressure on foreign exchange reserves and limit imports of the two precious metals. The new structure includes a 10 percent basic customs duty and a 5 percent agriculture infrastructure and development cess.

Experts said the higher duty could dampen demand in the world’s second-largest consumer of precious metals but may help narrow India’s trade deficit and support the rupee. However, they warned that the steep tariff could revive smuggling, which had declined after a previous duty cut in 2024. Surendra Mehta of the India Bullion and Jewellers Association noted that the government’s decision was expected as part of efforts to reduce the current account deficit, though it may affect demand amid already high prices.

Prime Minister Narendra Modi recently urged citizens to avoid buying gold for a year to protect foreign reserves. Bullion traders reported that banks had paused imports for over a month due to a 3 percent integrated goods and services tax, leading to a 30-year low in April imports. Imports may fall again following the latest duty hike.