India hikes gold, silver import duty to 15% to defend rupee

India has sharply raised import duties on gold and silver to 15% from 6%, stepping up efforts to curb overseas purchases of precious metals, protect foreign exchange reserves and stabilize the rupee.

The decision is aimed at cooling demand in the world’s second-largest consumer of precious metals, reducing India’s trade deficit and limiting pressure on the domestic currency.

The move follows Prime Minister Narendra Modi’s recent austerity appeal amid the escalating West Asia crisis, where he urged citizens to cut discretionary gold purchases and reduce fuel consumption. The Prime Minister also asked government and private offices to revive Covid-era practices such as work-from-home and virtual meetings, while encouraging citizens to carpool to save fuel.

However, industry officials warned that the sharp duty hike could trigger a fresh rise in gold smuggling, which had declined after tariff cuts introduced in mid-2024.

The pressure on the rupee remains intense. On Wednesday, the currency touched a record low of ₹95.75 against the US dollar before settling at ₹95.63.

Chief Economic Adviser V Anantha Nageswaran said ongoing structural shifts in the global economic order were unlikely to reverse soon, adding that preventing a further slide in the rupee had become one of the government’s “central macroeconomic imperatives” for the current fiscal.