India's gold tariff hike boosts grey market, hurts organised trade: WGC
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India has seen a rise in unofficial gold inflows since the government raised import tariffs on the precious metal earlier this year, widening margins for grey-market operators and hurting organised players, the World Gold Council said on Thursday.
India, the world's biggest gold consumer after China, more than doubled import tariffs to 15 per cent on May 13 to curb demand, cut the trade deficit and ease pressure on the rupee.
"The arbitrage is so huge. I mean, with the 15 per cent duty and 3 per cent GST, there's an 18 per cent difference, and that almost spurs an entire industry," Sachin Jain, chief executive of the WGC's Indian operations, told Reuters.
Grey market inflows and the disruption they cause are hurting organised players, he said.
The government didn't immediately respond to Reuters' queries.
Indian enforcement agencies seized nearly twice as much gold between May 13 and June 30 as they did between April 1 and May 12, with seizures rising to 160.91 kg from 86.16 kg, the government told parliament earlier this month.
Gold smuggling fell to 69.2 metric tons in 2024 from 156.1 tons a year earlier, and declined further in 2025 to 20.4 tons after India cut import duties on gold, according to data compiled by the WGC.
The recent resurgence in the grey market suggests illegal imports could exceed 100 tons in 2026, industry officials told Reuters last month.
India's net gold imports fell 23 per cent year-on-year to 98.1 tons in the June quarter, the lowest quarterly level since September 2020, when pandemic-induced lockdowns curbed demand, the WGC said in a report published on Thursday.
Gold demand in the June quarter declined 6 per cent from a year earlier to 131.4 tons, as falling jewellery purchases outweighed strong investment demand, the report said.
Demand is likely to improve in the second half of the year if prices remain stable, as many consumers who missed the earlier rally are expected to return to the market, Jain said.
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India's gold demand fell 6 per cent year-on-year to 131.4 tonnes in the April-June quarter, weighed down by seasonally subdued sales, higher Customs duty and Prime Minister Narendra Modi's appeal to reduce purchases of the precious metal, the World Gold Council said in a report.
The total demand was at 139.7 tonnes during the corresponding period last year, according to WGC's 'Q2 2026 Gold Demand Trends' report.
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