Modi government moves to protect rupee and foreign reserves amid rising oil prices and war-driven market shocks….
India has sharply increased import duties on gold and silver as authorities move to defend the weakening rupee and ease mounting pressure on the country’s foreign exchange reserves following the ongoing crisis in the Middle East.
The Indian government more than doubled import taxes on the precious metals from six per cent to around 15 per cent, according to official orders issued late Tuesday.
The move comes as soaring global oil prices and supply disruptions linked to the Middle East conflict continue to strain India’s economy.
Gold imports are largely financed in US dollars, meaning higher purchases place additional pressure on India’s foreign reserves and currency stability.
Prime Minister Narendra Modi had earlier appealed to citizens to temporarily reduce gold purchases, warning that the country’s financial system was facing increasing stress due to the prolonged depreciation of the rupee against the dollar.
The situation has worsened following the escalation of the Iran conflict and disruptions around the Strait of Hormuz, one of the world’s most important oil shipping routes.
The strategic waterway, through which nearly one-fifth of global crude oil supplies pass, has experienced severe disruptions since the outbreak of hostilities in the Middle East, causing sharp spikes in global energy prices.
India, which is the world’s third-largest importer of crude oil, has been among the countries most affected by the surge in petroleum costs.
Rising crude prices have significantly increased the country’s import bill, putting additional pressure on its balance of payments and weakening foreign currency reserves.
The Indian government fears sustained increases in energy costs could further weaken the rupee and fuel domestic inflation.
In response to the worsening supply crisis, Modi on Sunday urged Indians to reduce petrol and diesel consumption as part of broader efforts to manage the economic impact of the conflict.
Gold remains deeply tied to India’s culture and economy, serving as a major symbol of wealth and social status, especially during weddings and religious festivals.
The precious metal is currently India’s second-largest import after crude oil, making fluctuations in gold demand highly significant for the country’s external reserves and trade balance.
Economic analysts say the latest tariff hike is aimed at discouraging excessive gold imports while helping the government conserve foreign exchange amid rising uncertainty in global energy and commodity markets.
The decision also signals growing concern among policymakers over the broader economic fallout from the Middle East crisis, which continues to disrupt energy supplies and unsettle global financial markets.
