India's Higher Gold Tariffs Fuel Smuggling Surge, Industry Officials Warn
India's doubling of gold import tariffs to 15% in May has triggered a resurgence in smuggling, with industry officials warning illegal imports could exceed 100 tonnes in 2026. The government raised tariffs to reduce demand and ease pressure on the rupee, but smugglers can now offer discounts exceeding $200 per ounce—far more than legitimate importers can match. The shift threatens billions in lost tariffs and sales tax revenue while making India's grey market increasingly competitive.
India, the world's second-largest gold market after China, more than doubled its gold import tariffs to 15% in May 2024 as part of efforts to curb demand, reduce the trade deficit, and ease pressure on the rupee. However, the policy has created significant opportunities for smugglers, who can now offer prices that legitimate importers and banks cannot compete with. Industry officials and bullion dealers report that grey market discounts have exceeded $200 per ounce—more than 4% below official prices—while banks struggle to offer even $10 discounts. Multiple dealers predict illegal gold imports could surpass 100 tonnes in 2026, worth approximately $14.35 billion at current prices and representing roughly $2.65 billion in lost tariffs and sales tax. The resurgence highlights an unintended consequence of tariff policy: by widening the price gap between legal and illegal channels, the government has inadvertently incentivized smuggling networks.
What's missing
The article does not provide historical context on smuggling volumes before the May 2024 tariff increase, making it difficult to assess the magnitude of the 'resurgence' claim. Additionally, no information is given on enforcement efforts, penalties for smuggling, or government responses to the predicted surge.
What different sources said
- South China Morning PostCenter
Gold smugglers ‘make a killing’ in India as grey market outshines hefty tariffs
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