India Cuts Gold and Silver Import Duties to Boost Retail Demand and Curb Smuggling

India has reduced import duties on gold and silver to stimulate retail demand and reduce smuggling. The move is anticipated to lower domestic gold prices, thereby improving consumption. This change aims to create a fair market for genuine industry stakeholders and supports domestic value addition in precious metals.

India has reduced import duties on gold and silver in a bid to boost retail demand and curb smuggling activities, industry officials confirmed on Tuesday. The world's second-largest consumer of bullion is expected to witness increased demand, potentially driving global prices higher amidst a backdrop of a record-setting year.

Sachin Jain, CEO of World Gold Council's Indian operations, described the move as 'a massive step in the right direction' aimed at creating a level playing field for honest market participants. The new policy sets the basic customs duty at 5%, accompanied by a 1% Agriculture Infrastructure & Development Cess (AIDC), effectively reducing overall import duties from 15% to 6%.

Finance Minister Nirmala Sitharaman, while delivering the budget speech, stated that the duty cut is intended 'to enhance domestic value addition in gold and precious metal jewellery.' Following the announcement, local gold prices plummeted to their lowest in over three months. Meanwhile, shares of major jewellery companies surged, reflecting market optimism about increased consumption. Additionally, Sitharaman announced an import duty exemption for 25 critical minerals, including lithium, crucial for electric vehicle battery production.