India’s 15% bullion duty is pushing more gold and silver trade toward illicit channels
After India raised gold and silver customs duty from 6% to 15% on May 13, enforcement agencies reported a 186% jump in gold-consignment seizures and a more than tenfold rise in silver seizures through June 30. The shift threatens formal bullion and jewellery retailers by widening the price gap with unaccounted supply.
What happened
Government of India · India’s doubling of gold and silver import duty to 15% has coincided with sharply higher smuggling seizures, raising concerns for formal
Key facts
- Gold and silver customs duty raised to 15% from 6% on May 13, including 5% Agriculture and Infrastructure Development Cess
- Silver seizures rose more than 10 times between May 13 and June 30 versus April 1-May 12
- Gold consignment seizures rose 186% in the same comparison
- 267 smuggling cases filed between May 13 and June 30
- 160.91 tonnes of gold seized and 116 arrests between May 13 and June 30
- 86.16 tonnes seized, 165 cases and 67 arrests between April 1 and May 12
- Gold smuggling cases fell from 6,599 in 2023-24 to 3,005 in 2024-25
- Gold price reached $5,608 per ounce on January 29 and was quoted at $4,082 on Tuesday
Why this matters
Jewellery groups should prioritize partnerships or acquisitions that strengthen traceable sourcing, recycling and compliance capabilities, as illicit-channel growth raises the strategic value of verified supply networks.
What to watch
- Monthly gold and silver seizure data, especially whether elevated seizures persist beyond two quarters.
- Indian legal-market bullion premium versus international spot-adjusted landed price.
- Jewellery-chain same-store sales growth, gram-volume growth, gross margins and inventory days.
- Demand mix between plain gold, coins/bars, lightweight products and studded jewellery.
- Government statements on customs-duty review, anti-smuggling enforcement, refinery accreditation or import-channel changes.
- Hallmarking compliance actions, GST invoice enforcement and unusual growth in unorganized jewellery trade.
- Gold-price volatility and rupee depreciation, which can compound the duty-driven affordability shock.
- Tilt exposure toward large listed jewellery chains with trusted sourcing, hallmarking, buyback programs and lower dependence on bullion/coin sales.
- Monitor gross-margin guidance: sustained discounting, elevated gold-loan financing costs or inventory write-downs would indicate formal-market stress.
- Favor retailers with greater studded-jewellery mix, design differentiation and wedding-led demand, which are less directly substitutable with smuggled plain gold.
- Avoid assuming higher gold prices automatically benefit jewellers; duty-driven price premiums can suppress volume, increase working capital and encourage unaccounted transactions.
- Watch for chains tightening vendor due diligence, expanding gold-exchange/buyback programs, and shifting procurement toward recycled domestic gold.