India's Gold Imports Plunge Amid Higher Duties

India's gold imports have seen a sharp decline since May 2026, following an increase in import duties. According to Kotak Institutional Equities, the drop in official gold imports can be attributed to three factors: lower household demand due to higher duty rates, consumers postponing purchases in anticipation of a possible duty cut, or a shift towards unofficial import channels.

Kotak estimated that FY27 gold imports will reach USD 88 billion, up from USD 72 billion in FY26. The total import duty on gold rose to 15% from 6%, with the basic customs duty increasing to 10% from 5%. Including GST, the effective duty and GST incidence on imported gold increased to 18.5% from 9.2%

Kotak noted that a decline in official gold imports could reduce pressure on India's current account deficit and balance of payments. However, it also warned that a shift towards unofficial channels could result in reduced customs and GST collections without a corresponding decrease in underlying gold demand.