If you've been planning to buy gold jewellery or invest in physical gold, the news from Tuesday night changes your calculations significantly. The Finance Ministry made a major policy move late in the evening, raising the import duty on gold and silver from 6% to 15% — a sharp 9 percentage point jump that will push domestic gold prices noticeably higher in the coming weeks.And this didn't come out of nowhere. Prime Minister Narendra Modi had been laying the groundwork for exactly this kind of intervention for days.PM Modi's Appeal Came First — Then the Policy FollowedJust two days ago, at a public rally in Hyderabad, PM Modi made an unusual and direct appeal to Indian citizens: avoid buying gold for at least the next year unless it's absolutely necessary. He also asked people to use public transport and adopt carpooling to reduce fuel imports — both appeals pointing at the same underlying concern: India's widening trade deficit and the mounting pressure on foreign exchange reserves.He repeated the appeal again within hours of making it the first time. That kind of repetition from a sitting Prime Minister on an economic matter is a signal in itself.The government then followed through with action. By Tuesday night, the Finance Ministry had officially raised import duties on gold and silver — giving the PM's appeal a very concrete policy backbone.What the New Tax Structure Looks LikeThe government hasn't simply raised a single duty. It has restructured the entire tariff framework for gold and silver imports.Under the new order, a basic customs duty of 10% now applies to gold and silver imports. On top of that, a 5% Agriculture Infrastructure and Development Cess (AIDC) has been added. Together, these two components bring the total tax burden to 15%, up from the previous 6%.The combined 9% increase is one of the sharpest single-move hikes on precious metal imports in recent memory.How Much More Expensive Will Gold Get?Here's the part that directly affects buyers and investors.Gold in the domestic market is currently averaging around ₹1,50,000 per 10 grams in May 2026. A 9% additional tax on that translates to roughly ₹13,500 per 10 grams in increased cost at the import stage. Experts estimate that once this flows through to retail prices, gold could become around ₹10,000 more expensive per 10 grams in the domestic market.The reason the increase doesn't pass through in full is that gold already sitting in the market was imported at the old duty rates. So for now, prices remain at existing levels in many shops. But as old stock depletes and fresh imports come in at the higher duty, the price rise will be gradual but steady. If you're buying gold in the near term, expect to pay more within weeks rather than months.Why the Government Made This MoveIndia is the second-largest gold importer in the world. The country imports around 90% of its total gold consumption from abroad, and every import is paid for in US dollars. That means gold buying — whether for jewellery, investment, or religious purposes — directly drains India's foreign exchange reserves and widens the trade deficit.The rupee has also been under sustained pressure against the dollar, and reducing the outflow of dollars through gold imports is one lever the government can pull to ease that pressure without touching more sensitive economic variables.Surendra Mehta, Secretary of the India Bullion and Jewelers Association, has noted that the combination of already elevated gold prices and this new duty hike could meaningfully dent demand. For an industry that employs millions of people across mining, refining, jewellery making, and retail, that's not a trivial concern.But Gold Demand Has Been Surging — Here's WhyThe timing of this intervention makes sense when you look at what's been happening with gold demand in India. The stock market has delivered negative or weak returns for a stretch, and gold prices have been rising steadily for over a year. These two factors together have pushed a large number of Indian investors — both retail and institutional — toward gold as a safe store of value.According to the World Gold Council, investment in gold ETFs in India surged by 186% year-on-year in the March quarter of 2026, reaching a record high of 20 metric tonnes. That's an extraordinary jump, and it reflects a broader anxiety about equity markets and currency stability.The government, watching this demand surge translate into billions of dollars leaving the country in import payments, has now decided to put a significant financial speed bump in the way.What This Means for YouIf you're a jewellery buyer, prices are going up — plan accordingly. If you're buying gold for a wedding or occasion coming up soon, purchasing before fresh imported stock hits the market may still get you the current price, but that window is limited.If you're an investor in physical gold or gold ETFs, this duty hike will likely give domestic gold prices a short-term push upward as supply tightens slightly. However, it may also dampen overall demand over the medium term, which could moderate price gains.And if you work in the jewellery trade, the industry association's concerns about demand impact are worth watching closely.The government's message, between the PM's rally appeal and Tuesday night's policy decision, is unmistakable: India needs to reduce its gold import bill, and it's willing to use both persuasion and taxation to get there.
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