The Indian government has executed an emergency hike in import duties on gold and silver, raising the rate from 6% to 15% (effective May 13, 2026). This decisive move aims to curb a widening trade deficit and stabilize the rupee, which has been severely battered by the economic fallout of the escalating military conflict involving Iran.
The policy shift follows a historic plunge of the Indian rupee, which touched a record low of 95.73 per dollar on Tuesday. The currency has lost approximately 5% of its value since late February, primarily driven by:
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The Iran-Israel/U.S. War: Following joint U.S.-Israeli airstrikes on Iran on February 28, 2026, geopolitical instability has triggered a massive capital flight and a “risk-off” market sentiment.
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The “Twin Import” Shock: As the world’s third-largest oil importer and second-largest gold consumer, India is caught between soaring energy costs and a surge in safe-haven gold buying. With crude oil prices crossing $105 per barrel due to the crisis in the Strait of Hormuz, the demand for U.S. dollars to pay for these essential imports has drained national forex reserves.
Read more: Iran War: Mozambique among the most affected; Angola the most protected
On Sunday, May 10, Prime Minister Narendra Modi issued a rare direct appeal to the nation, urging citizens to adopt “COVID-era” discipline to protect the economy:
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Gold Moratorium: Modi requested a one-year pause on all non-essential gold purchases, describing citizens as “guardians of the Rupee.”
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Energy Conservation: To reduce the oil import bill, the Prime Minister advocated for a return to work-from-home (WFH) practices, increased use of public transport, and a 10% reduction in edible oil consumption.
Read more: Iran War: Mozambique among the most affected; Angola the most protected
The doubling of tariffs, combined with the Prime Minister’s call for a boycott, has sent shockwaves through the domestic jewelry market. In early trade on Wednesday:
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Kalyan Jewellers saw shares plummet by 5.5%.
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Titan Company and Senco Gold also recorded significant losses as investors fear a prolonged slump in demand.
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Smuggling Concerns: Industry analysts warn that the 15% duty (comprising a 10% basic duty and a 5% Agricultural Cess) may inadvertently revive illegal smuggling routes, as the price gap between official and unofficial channels widens.
The crisis is exacerbated by the effective closure of the Strait of Hormuz. By March 2026, the IRGC had claimed control over the strait, leading to a 70% reduction in maritime traffic. This blockade has caused the largest disruption to the world energy supply since the 1970s, hitting India’s supply lines for oil and gas directly and forcing the government to prioritize foreign exchange for energy over luxury commodities like gold.
