WGC Predicts 50 to 60-Tonne Reduction In Gold Imports: What This Means for Your Portfolio

India is famous for being one of the most gold-rich countries in the world. However, the massive scale of gold buying in India puts pressure on the country's import bill. Amid rising pressure on the import bill caused by a steep rise in crude oil prices, the government has put in place several measures to reduce imports of the yellow metal.

As India tries to curb its gold-buying, the World Gold Council (WGC) has projected that gold imports will decrease by  50 to 60 tonnes in 2026. On a year-on-year basis, this signals a 10 per cent decline from 2025. Notably, several norms enforced by the government are expected to drive this reduction and further stabilise the rupee and curb foreign exchange outflows which were caused by India’s massive gold import bill. In the fiscal year 2025–26 India’s gold import bill hit a record high of $71.98 billion, according to the Ministry of Commerce and Industry, Government of India. 

Tightening the Leash On Imports

One of the key measures put in place to reduce gold imports is the hike in import duties. The import duty was hiked earlier in May from 6 per cent to 15 per cent. The aggressive hike along with a slew of restrictive measures, such as a 100-kilogram limit on imports under the Advance Authorisation scheme and the suspension of critical bank import licenses are expected to lower India’s gold import bill.

The Duty-Demand Paradox

WGC mentioned in  its report that  historically, the relationship between import duties and official demand has been tenuous. Even as the government uses the hiked duty to curb imports the official volumes often remain resilient. In the past 13 years, despite varying duty regimes ranging from 6 per cent to 15 per cent, gold imports have stayed between 175 tonnes and 236 tonnes per quarter.

However, the report showed that high duty regimes often lead to the rise of the grey market. Earlier in 2013 and 2022 smuggling activity expanded as the market  attempted to meet the demand illegally. On the other hand lower duty imposed in 2024 curbed illicit inflows according to the report.

Why Gold Prices Are Lagging

Despite the import hike being introduced on May 13, the report showed that the domestic market has not priced in the duty hike completely. While the duty hike increased by 9 per cent, the price of gold in the near 10 day period has only jumped by 4 to 6 per cent. According to the report, the lag was caused by weak seasonal demand as the summer wedding cycle nears a close.

On the other hand, as gold prices rose, a wave of likely profit-booking by existing holders has also added to the local supply, dealers continue to clear inventory bought at lower tax rates.Thus, domestic prices are currently trading at a significant discount, sometimes as wide as $150 per ounce compared to international landed costs.

What Do Reduced Imports Mean For The Investor

Even though current prices are low, investors must take note of the volatility associated with the yellow metal as further regulatory intervention cannot be ruled out amid rising geopolitical tensions. On the other hand, investors should avoid the grey market and stick to transparent, organised retail platforms even as imports shrink the supply of the yellow metal. Gold buyers should ensure asset purity as the government continues to prioritise systemic stability over market growth for gold.