India's Gold Import Surge: Economic Impact and Policy Responses

India has seen a significant rise in gold imports, impacting its trade deficit and foreign exchange reserves. With imports exceeding $71 billion in 2025-26, driven by price hikes and geopolitical uncertainty, the government has implemented curbs to manage the situation. The industry calls for policy reviews to mitigate risks.

India's gold imports have skyrocketed, reaching an unprecedented $71.98 billion in the 2025-26 fiscal year. This surge has been driven largely by rising gold prices and geopolitical tensions, prompting Prime Minister Narendra Modi to call for austerity measures aimed at bolstering the economy.

Gold, traditionally seen as a safe-haven asset, is primarily imported for the jewellery industry. With Switzerland, the UAE, and South Africa as major suppliers, the imports have widened the country's trade deficit to $333.2 billion. This has also affected India's current account deficit, reaching 1.3% of GDP, as reported by the Reserve Bank of India.

To address this, the Indian government has imposed import duties and reviewed trade agreements, especially those with the United Arab Emirates, to limit the flow of gold. These measures aim to stabilize India's foreign exchange reserves and control the adverse effects on the economy.