India is the world's second-largest consumer of gold. However, domestic gold production is low, necessitating large-scale imports. Last year, India imported 640 tonnes of gold, valued at a record $72.4 billion. Gold is the country's second-largest import, after crude oil, which leads to a significant outflow of foreign currency. To curb these imports, the government increased the import duty on gold from 6% to 15%, effective May 13; however, this decision has led to an increase in gold smuggling. A report by the World Gold Council states that gold smuggling into India reached its highest level since 2023 during the third quarter of the year. Between July and September, the volume of smuggled gold entering the country surged by 1,500% to reach 50 tonnes—a sharp rise from just 3 tonnes a year earlier. The report notes that it does not specify how these smuggling instances were detected. Higher taxes on gold have fueled an increase in smuggling, as they boost profit margins for smugglers. In October, the price of gold fell by 6.8%, dropping below $4,000.
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