New Delhi: The increase in import duty on precious metals is a part of a broader strategy aimed at conserving foreign exchange, protecting the current account, prioritising essential imports, and strengthening India’s economic resilience in the face of evolving global uncertainties, government sources said on Wednesday.
The measure represents a balanced, proportionate, and nationally responsible response to extraordinary external conditions while maintaining due regard for macroeconomic stability and long-term economic resilience, they added.
The government has increased the customs duty on imports of precious metals, including gold, gold dore, silver, silver dore, platinum, etc., as a policy measure aimed at safeguarding macroeconomic stability, conserving foreign exchange, and moderating non-essential imports during a period of heightened global uncertainty arising from the ongoing West Asia crisis.
Import duty on gold and silver has been increased from 6 per cent to 15 per cent and the import duty on platinum has been increased from 6.4 per cent to 15.4 per cent. Consequential changes have also been made to other items such as gold/silver dore, coins, findings, etc.
The current geopolitical situation has created significant volatility in global crude oil markets and international shipping routes.
As a large importer of crude oil, India remains vulnerable to elevated energy prices and supply-side disruptions, which can increase the import bill, exert pressure on inflation, and the Current Account Deficit (CAD).
In such circumstances, prudent management of the country’s external sector becomes essential. Historically, customs duty adjustments have been used as one of several policy instruments to support macro-economic stability and effectively manage CAD-related pressures during periods of global volatility, said sources.
India’s foreign exchange resources must, therefore, be prioritised towards essential imports such as crude oil, fertilisers, industrial raw materials, defence requirements, critical technologies, and capital goods. These imports directly support economic activity, food security, infrastructure, manufacturing, exports, and national security.
In contrast, precious metals, while culturally and financially significant, are predominantly consumption and investment driven in nature.
Such imports involve substantial outflow of foreign exchange. Further, precious metals occupy a unique position in the import basket because they involve significant foreign exchange outflows while being relatively less linked to productive industrial activity compared to sectors such as energy, manufacturing inputs, infrastructure, or technology, said sources.
In periods of heightened geopolitical and commodity-market volatility, policymakers often seek to prioritise external resources towards areas with higher strategic and economic multiplier effects. Therefore, during periods of external stress, measured moderation of discretionary imports may contribute significantly to overall macro-economic stability and prudent external-sector management.
The increase in customs duty on precious metals is intended to moderate avoidable import demand and ease pressure on the external account.
“The measure is neither prohibitory nor anti-consumer in nature. It is a carefully calibrated and proportionate intervention designed to encourage moderation in non-essential imports at a time when external vulnerabilities remain elevated,” the sources noted.
The duty increase also sends a clear signal of prudent economic governance. It demonstrates that India is responding proactively to emerging external risks through timely, measured and targeted interventions, thereby reducing the need for more disruptive corrective measures at a later stage.
(IANS)
