India's Gold Imports Plunge Amid Higher Duties

Kotak Institutional Equities has observed a sharp decline in India's official monthly gold imports since May 2026, which could be both good and bad for the country's current account deficit (CAD) and balance of payments (BoP).

The brokerage firm pointed out that despite stable domestic gold prices since February 2026, official monthly gold imports have declined significantly. In fact, the value of gold imports has dropped from $7.4 billion in February 2026 to $2 billion in June 2026.

Kotak attributed the decline to lower structural gold purchases by households due to higher gold import duties introduced on May 13, 2026. However, it also warned that the decline may be a 'temporary pause' in household demand or even a diversion of gold imports to unofficial channels.

If the latter is true, Kotak noted that India's taxation structure on gold would require a relook. The brokerage firm has long argued for higher GST rates and lower import duties on gold as an alternative route to reduce gold imports, increase household gold recycling, and protect government revenues.