Impact on Consumers
For the everyday buyer, this is straightforward. Gold and silver are going to cost more. With a 900 bps increase (from 6% to 15%) in import duty on top of an already elevated price base means jewellery, coins, and bullion bars will all carry heavier price tags. For someone planning a wedding purchase or simply looking to add to their holdings, the timing is particularly difficult.
On May 13, 2026, MCX Silver prices advanced by ₹18,000, or over 7%, to approximately ₹2,97,000 per kg. Whereas MCX Gold stood at around ₹1,63,000 per 10 grams. As per Economic Times, the duty hike could lead to a decline in gold import volumes of approximately 10% to 15%. Noteworthy here is that almost half of the jewellery needs of the Indian market are already being fulfilled through the recycling of gold. As per Economic Times, the import demand for jewellery consumption had already decreased by almost 20% prior to this move, by early 2026, mainly due to the high costs involved. As a result, the jewellery sector has started manufacturing lighter and lower carat items.
Impact On MCX Gold And Silver Prices
The duty hike has direct consequences for commodity market participants. MCX gold and silver contracts are priced in rupees and factor in the import duty as part of their domestic pricing. The duty was cut from 15% to 6% in the FY25 Budget. The reverse is now playing out. With the duty back at 15%, expect MCX prices to reflect the higher import cost, which adds to already-elevated spot prices. The domestic price premium over international rates is set to widen again, introducing fresh volatility into MCX contracts and complicating spread trading between domestic and global benchmarks.
Gold ETFs Continue To See Strong Interest
Demand for gold as an investment has surged over the past year, driven by a sustained price rally and weak returns from equities. According to the World Gold Council, inflows into India's gold exchange-traded funds jumped 186% YoY in the March quarter, reaching a historic 20 metric tonnes. This tells you something important: Indians have been turning to gold not just for tradition but as a genuine financial hedge amid uncertain markets.
Before today's announcement, the government had already begun tightening the screws. As per Reuters, a 3% integrated goods and services tax levied on gold and silver imports prompted banks to pause purchases for over a month, pushing April imports to a near 30-year low. Banks have since resumed buying, but dealers say volumes are likely to fall sharply again now.
Household Gold And The Recycling Opportunity
There is a broader message embedded in this policy move. The government is not asking people to stop valuing gold, it is asking them to stop importing new gold at a time when the macroeconomic situation demands restraint. As per ET Now, India is estimated to hold around 20,000 tonnes of gold stored in households alone.
More effective use, recycling, exchange, and monetisation of that existing gold could meaningfully reduce the country's reliance on fresh bullion imports and ease the strain on the rupee and foreign exchange reserves. The longer-term goal is to gradually transform dormant household gold into productive domestic liquidity, while reducing unnecessary dollar outflows and strengthening long-term economic stability.
Conclusion
The government's decision to raise gold and silver import duties to 15% is a direct response to a real and pressing problem. Whether it achieves what it sets out to do will depend largely on how the market responds. If legal demand falls and grey market activity rises to fill the gap, the policy may need revisiting sooner than expected.
For now, buyers will feel it in their pockets, commodity traders will reprice their positions, and the jewellery trade will watch closely to see which way demand shifts.
