India's gold imports plunge 81% as tariffs bite into demand

India's gold imports contracted by 81.27% in September compared to the same month last year, while silver imports fell 49.11%, according to data released by the Ministry of Commerce and Industry.

The steep decline in precious metals inflows follows the government's decision in May to raise import duties on gold and silver to 15%, up from lower previous rates. The higher tariff has substantially increased the cost of importing the metals, dampening demand from jewellers, investors and industrial users.

Prime Minister Narendra Modi had separately appealed to citizens to defer non-essential gold purchases, seeking to moderate domestic demand and reduce import pressures. The combined impact of the tariff hike and the appeal appears to have driven the significant contraction in import volumes.

India is among the world's largest consumers of gold, with demand driven by jewellery production, investment demand and cultural preferences for the precious metal. The country has historically relied on imports to meet domestic consumption, making import trends a key indicator of overall demand in the economy.

The sharp pullback in precious metals imports also reflects efforts by authorities to manage the current account deficit and moderate foreign exchange outflows during a period of economic adjustment.