Gold imports plunge as tax shock halts bank shipments

Shipments stall as banks halt clearances, squeezing supply and pushing inventories into vaults nationwide

India’s gold imports are set to fall to a near three-decade low in April, as an unexpected tax demand on banks has disrupted shipments, Reuters reported on Thursday, citing industry and government sources. 

 Imports are estimated at around 15 metric tonnes, sharply lower than 35 tonnes a year ago and the monthly average of about 60 tonnes in FY26.  The disruption follows Indian customs authorities demanding a 3% integrated goods and services tax (IGST) on gold imports by banks, reversing an exemption granted in 2017.

Banks, which account for most refined gold imports, have halted clearances, leading to a supply bottleneck. Surendra Mehta, secretary at the India Bullion and Jewellers Association said banks have not cleared any gold consignments this month due to the tax demand. 

 A government official said only small quantities were routed via the India International Bullion Exchange, indicating restricted flows. 

 The slowdown comes despite strong seasonal demand during Akshaya Tritiya, one of India’s key gold-buying occasions. Industry estimates suggest around 8 tonnes of imported gold remain parked in vaults, awaiting clarity on tax treatment.

  India likely spent about $1.3 billion on gold imports in April, significantly below the $6 billion monthly average last fiscal year. Analysts say the sharp decline could weigh on global prices, given India’s position as the world’s second-largest gold consumer. Sources indicated the tax move, along with earlier delays in authorising bank imports, may be aimed at curbing inflows to narrow the trade deficit and support the rupee.

Meanwhile, jewellers have turned to alternative sourcing channels, though volumes remain limited, keeping domestic supply tight. Refiners have also faced disruptions, with imports of gold dore declining as authorities reportedly deferred or rejected fresh licence applications. Industry participants said this has constrained refining activity and limited supply in local markets.

Jewellers, particularly smaller players, have struggled to secure adequate inventory, forcing some to rely on recycled gold or secondary market purchases. Traders noted that unless clarity emerges on tax treatment and import procedures, supply tightness could persist in the near term, potentially supporting domestic prices even as global trends remain volatile.

(With inputs from Reuters)