India has raised import tariffs on gold and silver as efforts continue to support the rupee and reduce pressure on foreign exchange reserves during the ongoing Iran conflict.
The import tariff on gold and silver increased from 6% to 15%, more than doubling the previous rate.
India is the world’s second-largest gold consumer and relies on imports for most of its gold demand. Gold and silver make up nearly 11% of India’s total imports.
The higher tariffs are expected to reduce near-term physical gold demand in India and lower import flows.
We recall that in 2025, India sharply increased import tariffs on gold from 6% to 15% to protect its currency during the Iran conflict. This move was intended to curb imports, which were pressuring the country’s foreign exchange reserves. The immediate expectation was a significant headwind for physical demand from the world’s second-largest consumer.
As predicted, official import data for the second half of 2025 showed a near 20% decline, creating a noticeable premium on local gold prices. However, this dip in Indian consumer demand was largely offset on the global stage by strong safe-haven buying. Gold prices still rallied through much of 2025, reaching well over $2,400 per ounce by year-end.
The situation has since evolved, as the import tariff was partially rolled back to 8% in March 2026 amid easing geopolitical tensions. We are now seeing the effects of this normalization in demand. Initial reports following the Akshaya Tritiya festival earlier this month indicate a robust recovery in consumer buying.
For derivative traders, this returning Indian demand removes a key headwind that was present for much of last year. This renewed physical offtake provides a stronger floor for gold prices, which have been consolidating around the $2,450 level. We should now consider that any price dips will likely be met with stronger physical buying from this key market.
This consumer-led support is happening alongside continued aggressive purchasing from central banks, which added over 200 tonnes globally in the first quarter of 2026. Therefore, traders should be cautious about taking significant short positions. The confluence of recovering retail demand and sustained official sector buying suggests the path of least resistance is to the upside.
