India has raised import duties on gold and silver to 15% in an effort to reduce imports and protect foreign reserves. Yet demand for these metals is expected to remain strong.
Gold continues to hold cultural and financial importance in India. It is essential for weddings and festivals and serves as a form of savings in rural households. Even though gold prices have risen sharply over the past decade, annual demand has stayed steady between 666 and 803 tons. Jewellery demand may slow as buyers shift to lower carat options, but investment in bars and exchange-traded funds is increasing as investors look for safe assets.
The higher tariffs have also created risks of smuggling. Grey market margins have doubled to 18%, making illegal imports more profitable. Smuggled gold can now yield margins close to ₹30 lakh per kilogram, which is a concern for authorities.
Silver demand is also resilient. Its industrial use in solar energy and electronics is growing, while investor interest in silver exchange-traded funds has surged.
Although jewellery sales may face short-term pressure, India’s cultural and financial reliance on gold and silver ensures demand will remain firm. The tariff hike may slow official imports but cannot weaken the country’s deep rooted attachment to precious metals.