A story about duty hikes, smugglers, and why your jeweller is worried.
Picture this. You're a gold smuggler operating out of Dubai. Last year, things were good — but not spectacular. India had slashed gold import duty to just 6% in 2024, so the price spread between Dubai gold and Mumbai gold didn't justify the operational risk.
But on May 12, 2026, everything changed.
The Centre more than doubled the customs duty on gold and silver to 15% from 6%, and similarly hiked the import duty on platinum to 15.4% from 6.4%. The stated reason: India imports most of the gold it consumes, and large gold imports can become a macroeconomic problem by increasing dollar outflow, widening the trade deficit, and putting pressure on the rupee.
How big is the problem, really?
The value of gold imports rose to $71.98 billion in FY26 from $58.01 billion in FY25 — a 24% jump — even as import volume fell 4.76% to 721 tonnes. Silver imports jumped 42% in quantity and nearly 150% in value to $12.05 billion.
India bought less gold but paid far more for it. That's what gold at record highs and a rupee at ₹96 does to an import bill.
Now, the smuggling math — with correct numbers.
24K gold today trades at ₹15,791 per gram in India — which means 1 kilogram of gold is worth approximately ₹1.58 crore. At a 15% customs duty, the government collects approximately ₹23.7 lakh per kg on official imports. Before the hike, at 6%, it collected ₹9.5 lakh per kg.
The arbitrage window for a smuggler is ₹14+ lakh per kilogram — before subtracting operational cost and risk premium. On a 10 kg consignment (common in airport seizures), that's a ₹1.4 crore incentive to bypass customs.
SBI Research warned that wider price gaps between international and domestic gold markets have historically encouraged smuggling: "Invariably, rise in duty results in higher seizure by DRI."
The enforcement data confirms the pattern. In FY 2024-25, a total of 2,600 kg gold was seized by CBIC officers, and 533 persons were arrested. Between April–October 2025 alone, DRI and Customs seized 260 kg gold valued at over ₹254 crore at airports and seaports.
Gold smuggling via land route remains a major challenge along India's eastern and north-eastern borders, with syndicates exploiting porous terrain adjoining Myanmar, Bangladesh, China and Nepal. In FY 2024-25, land accounted for 55.9% of DRI's gold smuggling cases, air at 43.7%, and sea at 0.5%.
What does this mean for you?
If you're buying gold for a wedding or investment, expect domestic prices to reflect an additional 9% duty burden (from 6% to 15%) almost immediately. Soon after the announcement, gold prices jumped nearly 6%, and gold ETFs also started trading higher as markets reacted to the sharp duty hike.
If you're a jewellery exporter, your cost of raw material just jumped while your competitors in Turkey, UAE, and Thailand source gold at international prices. Your competitiveness just deteriorated.
And if you're hoping this solves India's CAD problem: Barclays India's chief economist says India's gold import bill is expected to rise further in FY27 (+$15 billion vs FY26), offsetting any volume decline.
The government is trying to plug a dollar leak with a duty hike. The history of Indian gold policy suggests this plugs the official pipe — and opens the unofficial one. With gold at ₹1.58 crore per kg, the unofficial pipe has never been more profitable.
