India, the world's second-largest gold consumer, has raised import duties on gold and silver to 15% from 6% in a bid to curb capital outflows that have weighed on the rupee.
The move comes just days after Prime Minister Narendra Modi urged citizens to cut back on bullion purchases for a year.
The government is now imposing a 10% basic customs duty and a 5% tax on gold and silver imports.
The cost hike comes as India's gold demand continues to surge, with average monthly imports rising to 83 tonnes in the first two months of 2026 from 53 tonnes a year earlier.
The surge is being supported by strong investment demand, with India's gold demand nearly doubling in the first quarter of 2026 to a record $25 billion, according to the World Gold Council.
However, the increase has also added to the country's already high import bill due to rising global energy prices and geopolitical uncertainty.
India remains a net importer with a merchandise trade deficit of over $330 billion in the financial year ending March 2026, up from around $280 billion the previous year.
Gold and silver account for almost 11% of total imports, while petroleum products and raw materials account for around 22%.
Pressure on the deficit is also driven by India's high dependence on energy imports, which account for around 85% of its fuel requirements.
This dependence has left the rupee vulnerable, with analysts expecting pressure from persistently high energy costs to further weaken the currency.
