India Faces Sharp Drop in Gold Imports During April Due to Sudden Tax on Banks

India's gold imports are heading toward their lowest level in nearly 30 years during April, recording only about 15 tons, after domestic banks stopped importing the precious metal following a demand to pay a sudden 3% tax on gold imports. 

According to industry and government sources, banks, which import most of the refined gold into India, completely halted shipments after Indian Customs began imposing the Integrated Goods and Services Tax (IGST) on imported gold. 

Surendra Mehta, Secretary of the India Bullion and Jewellers Association, said that banks have not cleared any gold shipments from customs during the current month, except for limited quantities cleared through the India International Bullion Exchange. 

India is the world's second-largest consumer of gold and had imported about 35 tons in April 2025, with a monthly average of about 60 tons during the 2025/2026 fiscal year ending in March. The level of 15 tons in April is the lowest for this month in nearly three decades, excluding 2020, when the COVID-19 pandemic caused jewelry stores to close.

 Traders believe that this sharp decline in India's imports may put pressure on global gold prices, especially with the change in the demand structure within the Indian market. In a related context, the World Gold Council revealed that investment demand for gold in India exceeded jewelry purchases for the first time ever during the first quarter of the year, as investors turned to bullion, coins, and gold exchange-traded funds (ETFs) amid weak stock returns. Investment demand for gold in India jumped by 52% on an annual basis to 82 tons, while demand for jewelry fell by 19.5% to 66 tons. Total gold consumption in the country also rose by 10.2% to 151 tons during the first quarter.

 Gold ETFs in India recorded record inflows of 20 tons during the first quarter, an increase of 186% on an annual basis, reflecting a clear shift in Indian consumer behavior from buying gold for adornment to acquiring it as an investment and hedging tool.