India’s gold imports doubled in July to an estimated 40-45 tonnes, up from 20 tonnes in June, signalling that consumer demand has shrugged off both a government plea and a steep customs duty increase. The rebound comes after two consecutive months of weak imports and suggests that the country’s deep-rooted cultural and economic attachment to gold remains intact.
Trade deficit and rupee pressure
Prime Minister Narendra Modi first urged Indians to postpone gold purchases last spring, and the government raised customs duties on gold from 6% to 15% in May. The measures were aimed at curbing imports of the metal, which accounts for roughly 11% of India’s total import bill. Oil, at about 22% of imports, is the larger burden, and the spike in crude prices linked to the U.S.-Iran war has hit India especially hard: the country imports nearly 85% of its fuel, and about half of its crude passes through the Strait of Hormuz.
The combined pressure of higher gold and oil prices pushed India’s merchandise trade deficit above $330 billion in the financial year ending March 2026, a 17.9% increase from over $280 billion the previous year. That widening deficit has weighed heavily on the rupee, making gold — already a traditional store of value — even more attractive as the currency depreciates.
Why demand bounced back
Industry feedback collected by the World Gold Council (WGC) indicates that deferred purchases returned to the market in July, driving higher footfall and a recovery in demand beyond essential wedding-related buying. Manufacturers reported rising order flows, and jewelers began replenishing inventories ahead of the festive season. Indian jewelry sales jumped by roughly one-third year-on-year to $21 billion in the second quarter, and jewelry merchants posted revenue growth of 30% to 60% year-on-year.
Titan Company, whose earnings are heavily tied to jewelry sales, reported a 63% profit increase in the second quarter and a notable rise in store traffic. Managing director Ajoy Chawla said the impact of the government’s measures was “not long-lasting,” adding that Indians view gold as a store of asset value — even those who never plan to sell their jewellery.
Cultural factors are equally important. Gold is deeply woven into Indian weddings, religious festivals and daily life. Around two-thirds of demand originates outside urban centres, where many people operate outside the formal tax system and use jewellery as a practical way to preserve wealth. A 2018 ICE360 survey found that 87% of Indian households own some gold, and more than 75% of families in the bottom 10% of income had managed to buy gold.
Metals Focus had predicted last May that the higher duty and the government’s appeal would have only a limited effect. The consultancy noted that consumers often delay purchases after sharp price increases but adjust over time, and that elevated duties could encourage a recovery in unofficial imports, which had fallen after a 2024 duty reduction.
Key takeaways
- India’s gold imports doubled in July to an estimated 40-45 tonnes after two weak months, defying a customs duty hike from 6% to 15% and the Prime Minister’s appeal.
- The country’s trade deficit exceeded $330 billion in FY2025/26, pressured by higher gold and oil imports, and the rupee has weakened as a result.
- Cultural attachment and gold’s role as a store of value — especially in rural areas where 87% of households own gold — keep demand resilient even when prices rise.
- Industry data from the World Gold Council and companies such as Titan show that deferred purchases returned in July, with jewellery sales up roughly a third year-on-year in Q2.
Common questions
Why did the Indian government try to discourage gold buying?
The government wanted to reduce the trade deficit, which was putting downward pressure on the rupee. Gold and silver together account for about 11% of India’s imports, and a spike in oil prices made the deficit worse.
How much gold do Indian households own?
According to a 2018 survey, 87% of Indian households own some gold. Even among the lowest-income households, more than 75% had bought gold.
India’s gold market has repeatedly shown that government pleas and tax increases have only a temporary effect. As long as cultural traditions endure and the metal is seen as a reliable store of value — especially when the rupee is under pressure — demand is likely to remain robust. For the latest price movements, check the live gold price.