India's Gold Imports Sink to Historic Low Amid Tax Controversy

India's gold imports in April 2025 plummeted to about 15 metric tons, a near 30-year low, due to an unexpected tax demand on banks. The imposition of a 3% integrated goods and services tax (IGST) has halted shipments, causing a significant dip in imports, despite high demand during Akshaya Tritiya.

India's gold imports in April are poised to hit a 30-year low at around 15 metric tons, reports indicate. This decline is attributed to an unexpected tax demand impacting banks, which typically import the bulk of India's refined gold.

The tax imposition follows a delay in formal government authorization for bullion imports by banks, with authorities now insisting on a 3% integrated goods and services tax (IGST). Initially exempted when the IGST was adopted in 2017, banks stopped clearing customs as the tax was enforced.

Despite the strong demand during the Akshaya Tritiya festival, banks refrained from shipments, waiting for customs officials to permit clearance without the GST. This strategy aims to curb gold imports, aiding in narrowing the trade deficit and stabilizing the rupee amid refiner struggles with import license rejections.