India imposes one of the highest import duties on gold in the world, a policy that has both supporters (who argue it protects the current account deficit) and critics (who contend it drives gold smuggling and raises costs for ordinary consumers). Understanding this duty is essential for any serious gold buyer or investor.
The Current Duty Structure
The basic customs duty on gold imports is currently 15%. On top of this, an Agriculture Infrastructure Development Cess (AIDC) of 5% is levied. Together with other surcharges, the effective import duty on gold bars is approximately 15–18% of the landed cost. This is one of the primary reasons why gold prices in India are significantly higher than international prices after currency conversion.
History of Gold Import Duties
India has a complex history with gold import controls. In the 1960s, gold imports were outright banned. In the 1990s, Non-Resident Indians were allowed to bring in limited quantities as part of liberalisation. The duty has oscillated significantly — at 2% in 2012, it was raised sharply to 10% by 2013 in response to a record current account deficit, then to 12.5% by 2019, and further adjustments followed. The current 15% rate was introduced to address the current account situation.
The Smuggling Problem
High import duties have historically created strong incentives for gold smuggling. The Directorate of Revenue Intelligence estimates that 100–150 tonnes of gold are smuggled into India annually, primarily through land borders and airports. Critics argue that reducing the duty would reduce smuggling while also lowering costs for legitimate buyers and the jewellery industry.