New Delhi – The Indian government has significantly tightened regulations on gold imports, capping the quantity allowed under the Advance Authorisation (AA) scheme at 100 kilograms. This directive, issued by the Directorate General of Foreign Trade (DGFT) on May 14, 2026, comes a day after a sharp increase in import duties on precious metals.
The Advance Authorisation scheme previously allowed exporters to import raw materials, including gold, duty-free for use in products destined for export, without any quantitative restrictions. The new measure aims to enhance monitoring and compliance, specifically targeting potential misuse of the duty-free facility by jewellery exporters.
Stricter Compliance Measures Introduced
To prevent arbitrage and ensure legitimate use, the government has imposed several new conditions for applicants seeking to import gold under the AA scheme:
- Fortnightly Reports: Authorisation holders must now submit fortnightly performance reports, certified by an independent chartered accountant, detailing all gold imports and exports under the scheme.
- Physical Inspections: First-time applicants will undergo a mandatory physical inspection of their manufacturing facilities to verify existence, production capacity, and operational status.
- Export Obligation: Subsequent Advance Authorisations will only be issued upon fulfilling at least 50% of the existing export obligation.
Regional DGFT authorities are also required to submit monthly reports on issued Advance Authorisations, further enhancing oversight.
Gold Import Duties Sharply Increased
The new import cap follows a substantial hike in import duties on gold and silver, effective May 13, 2026. The import duty on both gold and silver was raised from 6% to 15%. Additionally, the duty on platinum increased from 6.4% to 15.4%. These revisions also led to consequential duty changes for products like gold and silver dore, coins, and findings.
The effective tax burden on bullion imports has seen a significant jump. The basic customs duty on gold doubled to 10%, while the Agriculture Infrastructure and Development Cess (AIDC) was increased fivefold from 1% to 5%. This brings the effective import duty on gold and silver to 15%. When factoring in the 3% Integrated GST (IGST), the total levy on bullion imports now stands at 18.45%, up from 9.18% previously.
Economic Context and Impact
These stringent measures align with Prime Minister Narendra Modi's recent call for curbs on gold purchases and other austerity steps aimed at reducing avoidable foreign exchange expenditure. India, the world's second-largest gold consumer, relies heavily on imports to meet demand, leading to significant outflows of foreign exchange.
In FY2025-26, gold and silver imports surged by 26.7% year-on-year to $102.5 billion, accounting for 14% of India's total imports. Gold imports alone reached a record $71.98 billion in the same period, despite a 4.76% decline in volume to 721.03 tonnes. The government's actions are also a response to the rupee touching a record low of 95.75 against the US dollar on May 12, with the currency showing some recovery after the duty hike announcement.
Sources indicated that the tightening of rules was crucial to prevent potential misuse of the AA scheme, particularly to capitalize on price arbitrage immediately after the import duty hike.