By Yihui Xie and Preeti Soni
India’s illegal gold imports surged to the highest since 2023 in the third quarter as a government duty hike spurred use of unofficial channels, according to a report from the World Gold Council.
Informal shipments for July to September jumped more than 1,500% to 50 metric tons from 3 tons a year earlier, the producer-funded group said, citing data from consultancy Metals Focus. The report gave no details on how the trade is tracked.
Such imports typically go through avenues that avoid official duties, like smuggling or small quantities brought in by individuals. In the past, tax hikes have tended to “increase the incentive” for inflows through such channels, WGC added.
The informal bullion market in the world’s second-largest consumer has flourished since the government more than doubled import levies on gold and silver to 15% earlier this year. The move was as part of efforts to curb purchases as India tackles a ballooning trade deficit due to higher energy prices.
Indians buy the precious metal to celebrate births, religious festivals and, above all, weddings. It can serve as adornment, gift or contribution to family savings. Since there’s little domestic production, most demand is met through imports, which weighs heavily on the trade bill and the currency.
The move to raise taxes has also prompted more Indian households to turn to under-the-counter cash sales, where bullion and jewelry change hands without invoices that can be traced by authorities.
The country’s gold demand — spanning jewelry and investments — increased from the previous quarter, but most metrics point to a decline from a year earlier. Consumption typically increases in the last quarter, with major festivals like Diwali set to encourage purchases, the report said.
However, there are signs the expected increase may not come through. Jewelers are holding back for now, according to the country’s biggest precious metal refiner, as they bet that a recent drop in prices has further to run. Gold slumped 6.8% in October and broke under the key price of $4,000 an ounce, and has traded below that level since.
