In July 2026, India's gold imports grew by 4.77% to $4.16 billion, while silver imports crashed 66.1% to $171.68 million following a sharp customs duty hike. The government's decision to raise taxes from 6% to 15% is significantly altering buying patterns and raising concerns about potential smuggling.
India’s appetite for precious metals witnessed a sharp divide in July 2026, as the government’s recent customs duty hike began to reshape import trends. While gold imports maintained a modest growth, silver demand saw a severe contraction, highlighting the differing price sensitivity between the two metals after duties were raised from 6% to 15% on May 13, 2026.
Gold imports in July rose 4.77% to $4.16 billion. This growth, however, shows signs of cooling compared to earlier months in the fiscal year. Cumulative data from April to July 2026 shows gold imports climbing 32.41% to reach $15.17 billion. Switzerland remains the primary supplier, accounting for nearly 40% of India's gold inflow.
In contrast, silver imports took a significant hit, plummeting 66.1% to $171.68 million in July. The April-to-July cumulative figures tell a similar story, with silver imports declining by 50.81% to $718.42 million. Industry observers suggest that silver, often used for both industrial purposes and investment, is more sensitive to these cost increases, causing buyers to pull back or delay purchases.
The government implemented this tax increase to manage the trade deficit and protect foreign exchange reserves. However, the move has introduced new challenges for the organized bullion and jewelry sector. Higher landed costs are putting pressure on the profit margins of legitimate jewelry companies, which may struggle to pass on the full tax burden to price-sensitive retail consumers.
Another emerging risk is the rise in illegal trade. Following the duty hike, enforcement agencies have reported a surge in smuggling, with 161 kg of gold seized between mid-May and the end of June 2026. This trend poses a threat to organized players, as the price gap between legal imports and grey market goods may encourage consumers to bypass formal channels.
Looking ahead, investors and stakeholders in the jewelry and bullion space will closely watch the upcoming festive season demand. Whether organized retailers can maintain volume growth despite the higher price environment, and how effectively the government manages smuggling, will be critical factors determining the performance of the sector in the coming quarters.