New Delhi, May 13 (IANS): The government on Wednesday raised customs duties on gold and silver imports to 15 per cent from the previous 6 per cent, while platinum import duty was revised upward to 15.4 per cent from 6.4 per cent, as policymakers moved to contain mounting pressure on India’s foreign exchange reserves amid the ongoing West Asia conflict. The revised duty structure comprises a 10 per cent basic customs duty along with a 5 per cent Agriculture Infrastructure and Development Cess (AIDC) on gold and silver imports, taking the effective import tax to 15 per cent. The duty hike is aimed at discouraging inbound shipments of precious metals, which remain among the key contributors to higher foreign exchange outflows, and is expected to support broader macroeconomic stability. The move follows Prime Minister Narendra Modi’s earlier appeal to citizens this month to avoid non-essential gold purchases for a year and adopt austerity measures to conserve foreign exchange reserves amid global uncertainty linked to the West Asia crisis.
India is among the world’s largest consumers of gold, with demand driven largely by jewellery, investment, and festival-related purchases, making the duty hike a significant policy intervention with wide-ranging implications for consumers and investors alike. Despite the higher import costs, investor appetite for gold exchange-traded funds (ETFs) remained strong, with inflows surging 34 per cent month-on-month to Rs 3,040 crore in April compared with Rs 2,265 crore in March, according to data from the Association of Mutual Funds in India (AMFI). Silver ETFs, however, told a different story, recording an outflow of Rs 126 crore in April, marking the third consecutive month of withdrawals following outflows of Rs 683 crore in March and Rs 826 crore in February. The contrasting trends between gold and silver ETF flows reflect diverging investor sentiment toward the two precious metals even as the government moves to tighten controls on their import.