Gold Import Duty Hike: Dubai Gold May Get Cheaper for Indians as Import Tax Jumps
India’s decision to sharply raise import duty on gold and silver has triggered fresh buzz in the bullion market, with experts predicting a major rise in demand for gold imported through Dubai. The move is expected to push domestic gold prices higher, while imports routed via the UAE could become comparatively cheaper due to special trade concessions.
According to recent policy changes, the Indian government has increased the Basic Customs Duty (BCD) on gold from 6% to 15%. At the same time, the Agriculture Infrastructure and Development Cess (AIDC) has also been raised significantly. With the addition of 3% GST, the effective tax burden on gold has now climbed to nearly 18.45%, compared to around 9.18% earlier.
Why Dubai Gold Could Become More Attractive
The biggest reason behind Dubai gaining an advantage is the Comprehensive Economic Partnership Agreement (CEPA) signed between India and the United Arab Emirates. Under this agreement, gold imported from the UAE under the Tariff Rate Quota (TRQ) system receives a concessional duty benefit.
While regular gold imports into India now attract 15% customs duty, gold arriving from Dubai under the quota mechanism may face only 14% duty. Though the difference appears small on paper, it becomes highly significant in large-volume bullion trade.
Experts believe that as import duties continue to rise in India, Dubai could strengthen its position as a preferred global transit hub for bullion entering the Indian market. Even though the UAE is not a major gold producer itself, Dubai already serves as one of the world’s largest gold trading centers.
Silver Imports See Even Bigger Advantage
The duty gap is even wider in the case of silver. India has reportedly increased the general tariff on silver imports to 15%, while concessional imports from the UAE currently attract only 7% duty under the trade agreement.
This means importers sourcing silver through Dubai could save nearly 8% in taxes right now. Industry analysts suggest that the gap may widen further in the coming years, especially if the concessional tariff structure under the India-UAE agreement continues. Some estimates indicate UAE silver imports could eventually attract zero duty by 2031.
Impact on Gold Prices in India
The direct effect of the higher import duty is expected to be visible in retail gold prices across India. Since India relies heavily on imported gold, any increase in customs tax immediately raises the landed cost of bullion.
Market experts estimate that the revised tax structure could increase gold prices by thousands of rupees per 10 grams. Jewellers and bullion traders may pass the additional burden on to consumers, making jewellery purchases more expensive during the upcoming festive and wedding seasons.
Silver prices are also expected to remain volatile due to the revised tax structure and rising global demand.
Why the Government Increased Import Duty
The government’s move comes amid a sharp surge in gold and silver imports over the past year. Reports suggest India imported nearly $72 billion worth of gold during FY 2025-26, marking a significant jump compared to the previous year.
Silver imports reportedly witnessed an even sharper rise, increasing by around 150% year-on-year. Policymakers are believed to have raised duties in an attempt to reduce the growing trade deficit and control excessive bullion imports.
Experts Seek Simpler Rules
Trade experts and policy analysts have also raised concerns over the complexity of India’s customs duty structure. Industry representatives say importers often need to examine decades-old notifications and tax circulars to fully understand applicable duties and exemptions.
They argue that simplifying import regulations could improve compliance and make bullion trade more transparent.
What Buyers Should Know
For ordinary buyers, the message is clear: gold and silver jewellery may become more expensive in India in the coming months. However, concessional imports from Dubai could partially balance the market by offering traders a lower-duty sourcing route.
Anyone planning to invest in bullion or purchase jewellery may need to closely monitor import policies, international prices, and currency movements before making a decision.
