India's Gold Smuggling Rebounds Amid Record Tariffs

India's gold smuggling has seen a significant rebound after the government raised import duties earlier this year, according to the World Gold Council (WGC). The increased tariffs have created lucrative opportunities for illegal traders, making it increasingly profitable to smuggle gold into the country. This development is counterintuitive, as the higher duties were intended to curb gold demand and reduce India's trade deficit.

The WGC estimates that gold smuggling fell significantly in 2024 and 2025 after India reduced import duties, but has now surged following this year's tariff increase. Industry officials told Reuters last month that illegal imports could exceed 100 metric tons in 2026, potentially reversing much of the progress made in reducing smuggling.

The WGC's latest quarterly report shows a decline in net gold imports and domestic consumption due to elevated prices and higher import costs. However, investment demand for gold remains strong, with investors viewing it as a safe-haven asset during periods of economic uncertainty.