India has raised import tariffs on gold and silver in an attempt to defend its currency, a surprise move as the country races to limit the damage from the Middle East war and to shore up foreign-exchange reserves.
The government has more than doubled import taxes on gold and silver to about 15% from 6%, according to two official orders, imposing a 10% basic customs duty alongside a 5% agriculture infrastructure and development levy.
The hikes, aiming to dampen demand in the world’s second-largest bullion market, follow a rare weekend appeal from Prime Minister Narendra Modi. He urged citizens to forgo gold purchases as well as unnecessary foreign travel in order to help hold up the currency.
India, the world’s third-largest oil importer, has been hit hard by the inflationary shock caused by energy disruptions in the Persian Gulf.
Gold is the country’s largest import item after crude oil. Higher import bills have driven sharp foreign-exchange outflows, pushing the rupee down to a record low and prompting the Reserve Bank of India to step in.
New Delhi is still weighing other emergency steps, including raising fuel prices and curbing non-essential imports like electronic goods.
Gold is deeply ingrained in Indian culture and plays a vital role in savings, weddings and religious festivals. India meets almost of all its demand through imports, with 710 tons of gold coming in last year.
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