India’s recent increase in gold import duty from 6% to 15% is expected to moderate domestic gold demand in 2026, according to a new market update released by the World Gold Council (WGC). The report said the government introduced the duty hike alongside broader regulatory measures aimed at curbing imports and conserving foreign exchange reserves amid pressure on the Indian rupee, which has depreciated by more than 7% year-to-date.

The 9% increase, announced on May 13, 2026, marks the steepest rise in India’s gold import duty on record and reverses the reduction introduced in July 2024. The WGC noted that domestic gold prices have not fully reflected the increase because of weak seasonal demand and sufficient market supply.

According to the report, domestic gold prices have traded at a significant discount to official landed prices following the revision. Discounts widened from an average of $14/oz before the duty hike to nearly $150/oz afterwards, as investors booked profits and dealers released inventory imported at lower duty rates.

The WGC said listed jewellery companies saw share prices decline by around 2%-17% following the announcement, reflecting expectations of weaker discretionary demand. Retailers also reported a likely slowdown in procurement activity, although bridal demand and inventory buffers continue to support larger chains.

Mid-sized and regional jewellers are expected to depend more heavily on exchange programmes and tighter inventory cycles, while smaller retailers face additional pressure on margins and sales volumes due to persistently high gold prices. The report also highlighted a historical relationship between higher import duties and increased unofficial gold inflows. Following earlier duty hikes in 2013 and 2022, smuggled gold imports rose sharply, while reductions in duty led to declines in unofficial inflows.

Despite the tighter import regime, official imports have remained relatively resilient. WGC data showed April 2026 gold imports rose to $5.6 billion, supported by refinery demand ahead of Akshaya Tritiya and possible front-loading of shipments before further restrictions. Looking ahead, the WGC estimates that combined jewellery and bar-and-coin demand in India could decline by 50-60 tonnes in 2026, or around 10% year-on-year, due to the impact of the higher import duty.