India’s Gold Imports Fall as Higher Duty Drives Grey Market Activity: WGC

As per a Reuters report, India's gold market recorded slower activity during the June 2026 quarter, with both imports and consumption declining.  

According to the World Gold Council (WGC), net gold imports fell 23% year-on-year to 98.1 tonnes, the lowest quarterly level since September 2020.  

Overall gold demand also dropped 6% to 131.4 tonnes as jewellery purchases remained subdued despite continued interest in gold as an investment. 

Higher Tax Encourages Unofficial Trade 

The WGC noted that the increase in import duty has made unofficial gold imports more attractive. India raised the import duty on gold to 15% on May 13, 2026, to curb demand, reduce the trade deficit and support the rupee. After adding the 3% Goods and Services Tax (GST), legally imported gold now carries an 18% tax burden. 

According to the council, the wider price gap between legal and illegal supplies has strengthened the grey market. It said organised jewellers and authorised importers are facing pressure as smuggled gold becomes cheaper than officially imported metal. 

Seizure Data Reflects Change 

Government figures presented in Parliament show that enforcement agencies seized 160.91 kg of gold between May 13, 2026, and June 30, 2026, almost double the 86.16 kg seized between April 1 and May 12. The increase came soon after the higher import duty came into effect. 

The latest trend contrasts with the previous two years. WGC data showed gold smuggling had declined from 156.1 tonnes in 2023 to 69.2 tonnes in 2024 and further to 20.4 tonnes in 2025 after import duties were reduced.  

However, industry estimates cited by Reuters indicate illegal imports could exceed 100 tonnes in 2026 if current conditions continue. 

Organised Trade Under Pressure 

The WGC said the rise in unofficial inflows has disrupted the formal gold market by diverting business away from authorised channels.  

Lower jewellery demand and reduced legal imports have added to the challenges faced by organised retailers during the June quarter. 

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Conclusion 

Official data for the June quarter showed lower gold imports alongside higher seizure volumes after the duty revision. The WGC said the higher tax structure has strengthened grey market activity. 

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