Gold Price: Exciting news for the Indian bullion market and gold enthusiasts! The government is contemplating lowering the customs import duty on gold from 15% to 6%. If this change goes through, we could witness a notable drop in gold prices across the country.
It’s important to remember that in May 2026, the government raised the import duty on gold to 15% due to mounting pressure on foreign exchange reserves. Analysts at Swastika Investmart suggest that this potential duty cut will directly influence gold prices in the domestic market, as well as impact smuggling and jewelry demand during the upcoming festive and wedding seasons.
How much could prices decrease if the duty is lowered from 15% to 6%?
India imports between 700 to 800 tons of gold each year to satisfy its gold requirements. With a 15% import duty, a minimum price for gold is established in the domestic market.
If the duty is reduced from 9% to 6%, the disparity between the international market and the Indian market will significantly decrease. This will lead to a direct reduction in the landed cost of gold in local bullion markets, benefiting retail buyers directly.
Currently, if the import duty on 24-carat gold in Delhi is ₹1,63,890 per 10 grams, a direct reduction of 9% would result in a substantial drop of Rs 14,750, bringing the price down to around Rs 1,49,140 per 10 grams. Similarly, the price of 22-carat gold will decrease by Rs 13,522 from Rs 1,,50,240 per 10 grams, resulting in an approximate price of Rs 1,36,718 per 10 grams.
Reducing smuggling and promoting the legal market
A report from Swastika Investmart indicates that the primary drawback of a high import duty (15%) is that it fosters gold smuggling and illegal imports. A 6% duty would close the price gap between legally imported gold and illegal gold. This change would motivate bullion traders and jewelers to source gold through official channels, ultimately enhancing government revenue collection.
Jewellery demand will surge during the wedding season
In Indian culture, gold purchases are most prevalent during weddings and festivals. The decline in gold prices will improve the budgets of middle-class families and retail buyers, which could lead to a significant increase in jewelry demand.
Bullion traders and retail jewelers will rapidly adjust their making charges and final retail prices to reflect the new import costs. This impact will be particularly felt in tier-2 and tier-3 cities.
What is the advice for investors?
According to Swastika Investmart, retail investors and traders investing in gold should keep an eye on this policy change:
Physical Gold vs Gold ETF: The reduction in duty will reduce the premium on physical gold, making investing in Gold ETFs and Gold Funds a more profitable and safer option.
Jewellery and Minding Stocks: Falling gold prices and rising sales could improve margins and performance of leading jewellery companies and gold-linked stocks.
The new gold rates will be implemented in the bullion market as soon as the government officially announces them. If you’re planning to buy gold for the festive season or weddings, or invest in gold ETFs, it’s wise to closely monitor this potential duty reduction decision.