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India’s gold market could be heading toward a sharp price rise after the government significantly increased import duty on gold and silver. Market experts believe the latest move may push gold prices up by as much as ₹14,000 per 10 grams in the domestic market, creating fresh concerns for jewellery buyers and investors alike. At the same time, analysts are now recommending alternatives such as Digital Gold and Gold ETFs as safer and more cost-effective investment options.

The central government has officially raised the effective import duty on gold and silver from 6% to 15%. The revised structure includes a 10% Basic Customs Duty along with a 5% Agriculture Infrastructure and Development Cess. According to officials, the decision has been taken to reduce excessive imports of precious metals and ease pressure on India’s foreign exchange reserves.

The announcement triggered an immediate reaction in the commodities market. Prices of gold and silver on the Multi Commodity Exchange (MCX) surged sharply after the notification was issued. Gold prices reportedly climbed by nearly ₹9,000, while silver witnessed a jump of around ₹17,000. Industry experts now warn that the impact could become even stronger in the coming weeks as imported stocks become more expensive for traders and jewellers.

The increase in import duty is expected to directly affect consumers across India. Since the country imports a large portion of its gold demand, any rise in import taxes immediately increases domestic prices. This means jewellery purchases for weddings, festivals, and investments could become significantly more expensive. Retail customers may soon have to pay much higher rates for gold ornaments and silver items.

India remains one of the world’s largest gold-consuming nations, where the yellow metal is viewed not only as jewellery but also as a trusted form of long-term savings and wealth protection. Government figures show that India’s gold imports touched nearly $51.4 billion in FY25, marking an increase of approximately 13.7% compared to the previous year. Rising imports have also added pressure on the country’s current account deficit and foreign currency reserves, prompting the government to take corrective measures.

Industry representatives believe the latest duty revision could reshape the jewellery business in India. Nitin Kedia, National Secretary of the All India Jewellers and Goldsmith Federation (AIJGF), said the increased duty may push gold prices higher by nearly ₹13,000 to ₹14,000 per 10 grams. He also warned that smaller jewellery businesses could face serious challenges because of reduced consumer demand and rising costs.

According to Kedia, nearly 10% to 15% of jewellery stores could struggle to survive if gold prices continue to rise sharply. Even major jewellery brands may consider shutting down underperforming outlets if consumer demand weakens over time. The industry fears that high prices could discourage middle-class buyers, especially in smaller cities and towns where jewellery purchases are highly price-sensitive.

Experts from the bullion market also believe that higher prices may temporarily slow down physical gold purchases. Surendra Mehta, National Secretary of the India Bullion and Jewellers Association, stated that the government’s decision appears aimed at controlling the current account deficit. However, he noted that consumer demand may decline further because gold and silver prices are already trading at elevated levels.

Amid rising uncertainty, investment advisors are increasingly suggesting digital investment products linked to gold instead of physical purchases. Harish V, Head of Commodity Research at Geojit Investments Limited, said Digital Gold and Gold ETFs may become more attractive for investors under the new pricing environment. He explained that these options allow investors to benefit from rising gold prices without worrying about storage, theft risks, or making charges associated with physical jewellery.

Gold ETFs and digital gold products also offer better liquidity and easier access for small investors. Analysts believe these investment formats could witness higher demand if physical gold prices continue to rise rapidly due to import-related costs.

Another major concern emerging after the duty hike is the possibility of increased gold smuggling. Interestingly, the government had reduced import duty from 15% to 6% in Budget 2024 partly to curb illegal gold imports. Market experts now fear that the latest hike could once again encourage smuggling activities, as higher domestic prices create opportunities for illegal trade networks.

Despite these risks, analysts believe the move could help India reduce its overall import bill in the short term. Gold currently contributes nearly 9% to 10% of India’s total import expenditure. A slowdown in imports could therefore provide some relief to the country’s foreign exchange reserves and help stabilize the current account deficit.

For now, investors, jewellers, and consumers will be closely watching how the market reacts over the next few weeks as gold prices continue to fluctuate following the government’s major policy shift.