India’s gold imports have declined sharply following the increase in import duty, according to an analysis by Kotak.
The drop indicates that higher import costs are weighing on overseas gold purchases, with importers and jewellery businesses adjusting procurement in response to the increased duty. Gold is one of India’s largest import items and changes in import volumes can have a significant impact on the country’s merchandise trade balance.
The duty increase has also raised the landed cost of imported gold, potentially affecting jewellery manufacturers, bullion traders and consumers. Importers may increasingly rely on existing inventories or adjust purchase timing depending on domestic demand and international gold prices.
India remains heavily dependent on imports to meet its gold requirements, particularly for the jewellery industry. Changes in import duties are therefore closely watched by the trade and bullion markets.
According to Kotak’s assessment, the sharp fall in imports highlights the immediate impact of the higher duty on gold demand and procurement. The extent to which imports recover will depend on domestic consumption, global gold prices, exchange-rate movements and future government policy.
The development could also influence India’s trade deficit and foreign-exchange outflows, as gold accounts for a substantial share of the country’s overall import bill.