India’s Gold Tariff Hike Fuels Grey Market: WGC

India’s decision to raise gold import tariffs to 15% has led to a sharp increase in unofficial gold inflows, negatively impacting organised jewellery businesses, according to the World Gold Council (WGC). The higher duty, combined with 3% GST, has created an 18% price gap that has encouraged illegal gold trading and boosted grey-market activity.

The rise in smuggling is reflected in enforcement data, with authorities seizing 160.91 kg of gold between May 13 and June 30—almost double the amount seized in the previous six-week period. While gold smuggling had fallen significantly after earlier duty cuts, industry officials now estimate illegal imports could exceed 100 tonnes in 2026 following the latest tariff increase.

The WGC also reported that India’s net gold imports dropped 23% year-on-year to 98.1 tonnes in the June quarter, while overall gold demand declined 6% to 131.4 tonnes due to weaker jewellery purchases. However, investment demand remained strong, and the council expects consumer demand to recover in the second half of the year if gold prices remain stable.

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