The Centre has increased customs duty on imports of precious metals, including gold and silver, from 6% to 15% amid rising tensions in West Asia and growing concerns over global economic uncertainty. The decision comes days after Prime Minister Narendra Modi urged citizens to adopt austerity measures and delay non-essential purchases such as gold to help conserve foreign exchange reserves during the ongoing geopolitical crisis.

According to the government, the move is aimed at protecting India’s macroeconomic stability and reducing pressure on the country’s external sector at a time of global volatility. Import duty on gold and silver has now been raised from 6% to 15%, while the duty on platinum has increased from 6.4% to 15.4%. Similar changes have also been made for products such as gold and silver doré, coins, and findings.

“The policy measure aimed at safeguarding macroeconomic stability, conserving foreign exchange, and moderating non-essential imports during a period of heightened global uncertainty arising from the ongoing West Asia crisis,” a government official said, requesting anonymity.

The government said the current geopolitical situation has created instability in crude oil markets and international shipping routes. Since India depends heavily on imported crude oil, rising energy prices and supply disruptions could increase the country’s import bill and put pressure on inflation as well as the current account deficit (CAD).

“The current geopolitical situation has created significant volatility in global crude oil markets and international shipping routes. As a large importer of crude oil, India remains vulnerable to elevated energy prices and supply-side disruptions, which can increase the import bill, exert pressure on inflation, and the current account deficit (CAD). In such circumstances, prudent management of the country’s external sector becomes essential,” the official said.

The Centre explained that customs duty changes have often been used in the past as a policy tool to manage external sector pressures during periods of global instability. The government believes that India’s foreign exchange reserves should currently be focused on essential imports such as crude oil, fertilisers, industrial raw materials, defence equipment, critical technologies, and capital goods. These sectors directly support manufacturing, exports, infrastructure development, food security, and national security.

The official added that imports of precious metals are largely driven by consumption and investment demand. Such imports lead to a major outflow of foreign exchange while contributing less to productive industrial activity compared to sectors like manufacturing, energy, infrastructure, or technology.

“In periods of heightened geopolitical and commodity market volatility, policymakers often seek to prioritise external resources towards areas with higher strategic and economic multiplier effects. Therefore, during periods of external stress, measured moderation of discretionary imports may contribute significantly to overall macroeconomic stability and prudent external sector management,” he said.

The government stressed that the increase in customs duty is not intended to stop imports completely or target consumers. Instead, it is meant to reduce avoidable demand and ease pressure on the external account during a difficult global situation.

“The increase in customs duty on precious metals is intended to moderate avoidable import demand and ease pressure on the external account. The measure is neither prohibitory nor anti-consumer in nature. It is a carefully calibrated and proportionate intervention designed to encourage moderation in non-essential imports at a time when external vulnerabilities remain elevated,” the official said.

The Centre also linked the move to the Prime Minister’s recent appeal for economic discipline and responsible spending during the ongoing crisis. Citizens have been encouraged to cut unnecessary foreign expenditure, conserve fuel, and support domestic alternatives to strengthen India’s economic resilience.

“The measure is also aligned with the broader national economic discipline emphasised by the Prime Minister in the context of the evolving global situation. Citizens have been urged to reduce avoidable foreign expenditure, promote domestic alternatives, conserve fuel, and support national economic resilience through responsible consumption choices. In this broader context, moderation in discretionary precious metal imports may be viewed as part of a wider collective effort to strengthen economic stability during a period of uncertainty,” he said.

The government described the duty hike as a preventive and forward-looking measure aimed at reducing risks before external pressures become more serious. Officials said the decision reflects a balanced approach because it relies on moderate price-based disincentives instead of stricter measures like import restrictions.

“The decision reflects a preventive and forward-looking approach to external sector management. As mentioned earlier, customs duty has historically served as an effective policy instrument for moderating non-essential imports and managing CAD-related pressures during periods of global volatility. Through this measure, the government seeks to prudently manage emerging risks and reduce vulnerability to potential external shocks before pressures intensify further,” the official said.

The Centre also said the move sends a message of prudent economic governance and shows that India is taking timely steps to deal with emerging global risks.

“Further, rather than resorting to quantitative restrictions or more severe import management tools, the approach relies on moderate price-based disincentives that preserve market flexibility and consumer choice,” he said.

The government pointed out that customs duty on precious metals has changed over time, depending on the country’s economic condition. During periods of stronger foreign exchange reserves and stable external conditions, duties were lowered. In the Union Budget 2024-25, customs duty on gold and silver was reduced from 15% to 6%, while platinum duty was cut from 15.4% to 6.4%.

Officials said those reductions reflected a more comfortable macroeconomic position at the time. The current increase, however, reflects changing global conditions and rising external risks linked to the conflict in West Asia.

Overall, the Centre said the latest duty hike is part of a larger strategy to conserve foreign exchange, protect the current account deficit, prioritise essential imports, and strengthen India’s economic resilience during a period of global uncertainty.