Explained: How Rising Gold Imports Harm the Economy—Understand the Full Story Through the Data..

On Sunday, PM Modi urged the public to defer gold purchases in order to give a boost to the economy. In fact, the country has witnessed a massive surge in gold imports over the past few years. India's gold imports rose by over 24 percent in 2025-26, reaching a record high of $71.98 billion. This figure stood at $58 billion in 2024-25, $45.54 billion in 2023-24, $35 billion in 2022-23, $46.14 billion in 2021-22, $34.62 billion in 2020-21, and $28.2 billion in 2019-20. High gold imports place a strain on the country's trade deficit and foreign exchange expenditure.

In 2025-26, the trade deficit widened to $333.2 billion. Consequently, the country's Current Account Deficit has also been impacted. India is the world's second-largest consumer of gold, following China. The government has imposed restrictions on the import of products related to gold, silver, and platinum to prevent the misuse of Free Trade Agreements. Specifically, certain traders were exploiting lower tax regimes in other nations to boost imports—particularly from countries like Thailand—under the guise of importing "unstudded jewelry." The impact of this practice is clearly evident on the government exchequer.

India is the world's second-largest consumer of gold, after China. Imports are primarily driven by the jewelry industry. During times of global uncertainty, gold is perceived as a safe-haven investment, which leads to an increase in its demand. According to the Ministry of Commerce, the surge in gold imports is primarily attributable to a spike in prices. The price rose from $76,617.48 per kilogram in 2024-25 to $99,825.38 per kilogram in 2025-26. In the national capital, the price of gold hovers around ₹1.5 lakh per 10 grams. It was in April of last year that the price crossed the ₹1 lakh per 10-gram mark for the first time.

**How ​​Excessive Gold Imports Harm the Economy**

Excessive gold imports place pressure on the country's trade deficit and foreign exchange expenditure. In 2025-26, the trade deficit widened to $333.2 billion. The Current Account Deficit (CAD) was also impacted; according to the Reserve Bank of India (RBI), the CAD rose to $13.2 billion (1.3 percent of GDP) during the October-December quarter. Gold accounts for more than nine percent of the country's total imports. In 2025-26, India's total imports stood at $775 billion.

**From Which Countries Does India Import Gold?**

Switzerland is India's largest source of gold, accounting for approximately 40 percent of imports. It is followed by the United Arab Emirates (UAE) with over 16 percent, and South Africa with roughly 10 percent. Meanwhile, total merchandise imports from Switzerland (including gold) rose by 11.36 percent during 2025-26, reaching $24.27 billion.

**How ​​Gold Imports Will Be Reduced**

The government has imposed restrictions on the import of products related to gold, silver, and platinum to prevent the misuse of Free Trade Agreements (FTAs). Certain traders were exploiting tariff differentials to boost imports from countries like Thailand, specifically under the guise of importing "plain jewelry" (jewelry without gemstones). In 2022, the import duty was raised from 10.75 percent to 15 percent. However, in the 2024-25 budget, this duty was reduced to six percent with the aim of boosting the jewelry industry and curbing smuggling. **What the Experts Say**

The economic research institute, Global Trade Research Initiative (GTRI), has urged the government to review its Free Trade Agreements (FTAs)—specifically the concessions granted under the India-UAE trade pact. Under this agreement, gold can be imported from the UAE at a tariff rate one percent lower than the standard duty. This quota is set to increase from 120 tons to 200 tons by 2027. According to Ajay Srivastava, founder of GTRI, following the tariff reduction in 2024, gold arriving from Dubai is effectively entering India at a duty rate of just five percent.

**Gold Imports from the UAE Are Rising Rapidly**

Gold imports from the UAE have surged significantly. The value of these imports stood at $2.9 billion in 2022, $6.7 billion in 2023, and $16.5 billion in 2025. Before the FTA, Dubai's share of India's total gold imports was 7.9 percent; this figure is projected to rise to 28 percent by 2025. Srivastava noted that this trend is concerning, as the UAE neither mines gold nor engages in any major gold processing activities. It appears that a substantial portion of this trade involves the transshipment of gold from third countries via Dubai, solely to capitalize on India's lower tariff rates. GTRI has recommended the implementation of stricter regulations, a review of existing concessions, and the exclusion of gold, silver, platinum, and diamonds from future trade agreements in order to safeguard India's trade balance and foreign exchange reserves.

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