Budget 2025 Countdown: Will India Hike Gold Duties Amid Soaring Imports?

With Budget 2025 just days away, speculation is rife over a potential gold import duty hike after last year’s record 9% cut fueled soaring imports. In November 2024, gold imports surged to $14.8 billion, widening India’s trade deficit and weakening the rupee to nearly 87/USD. While economists push for higher duties, the jewellery industry warns that reversing cuts could hurt competitiveness and revive gold smuggling.

New Delhi: With just three days left to Budget 2025, there's a lot of buzz surrounding the sectors that will be impacted once Finance Minister Nirmala Sitharaman presents it in Parliament on February 1. One key area is the Gold market; experts expect the Budget to see a duty hike amid soaring imports. It is noteworthy here that in 2024, the Union Budget announced a 9% cut in import duties on gold, reducing the duty from 15% to 6% and from 14.

35% to 5.35% for gold dore imports. This was the highest reduction in the duty since 2013.

India's Gold Duty Policy Under Scrutiny Ahead of Budget 2025 Speculation is mounting over a possible revision of gold import duties. While previous duty cuts have spurred gold consumption, economists argue they have failed to drive domestic value addition or boost exports. Instead, the surge in imports has widened the fiscal deficit, with the rupee depreciating to nearly 87 against the dollar.

Gold Imports Fuel Rising Trade Deficit Trade data for November 2024, released on December 16, highlighted a record-high trade deficit, primarily driven by soaring gold imports. Initial estimates suggested imports reached $14.8 billion, accounting for 21% of total merchandise imports.

Despite downward revisions, gold imports remain significantly high. India, the world’s second-largest consumer of gold, imports the bulk of its demand. The July 2024 duty reduction made gold more affordable, fueling an import surge.

This led to a 104% year-on-year rise in gold imports in August 2024. While imports slowed in subsequent months, they spiked again to record levels in November. Industry Pushes to Maintain Lower Duties Despite record imports, industry leaders are urging the government not to reverse the duty cuts.

They argue that: Lower duties reduce gold smuggling by decreasing the landing cost.The jewellery sector benefits, as reduced duties free up working capital, improving financial health and global competitiveness. Budget 2025: What Lies Ahead for Gold Import Policy? With the Budget announcement approaching, jewellers and traders hope for continued policy support.

Any hike in import duties could disrupt the fragile equilibrium of the gold market, while a sustained lower-duty regime might continue supporting the sector’s growth. Get Latest News Live on Times Now along with Breaking News and Top Headlines from Budget 2025, Business Economy and around the world..