India's gold squeeze: the duty hike, the appeal not to buy and the sovereign gold bond question

The stated aim, as reported, was to cut imports, protect foreign-exchange reserves and steady the rupee, which had recently hit a record low of 95.75 to the US dollar. Coverage ties the pressure to higher oil prices from the Middle East conflict and a wider current-account deficit. Gold makes up more than 5% of India's imports, so it is one of the few large import lines a government can try to move quickly.

• Law: the import duty. The rise from 6% to 15% applies to gold and silver coming into the country. It makes imported metal more expensive for importers and, through them, for jewellers and buyers.
• Appeal: “don't buy for a year”. The Prime Minister's request is voluntary. We found no rule that stops an individual buying gold, no purchase limit and no enforcement mechanism for the appeal.
• Not a ban. “Gold buying stopped by the government” is a loose summary. What exists is a higher price on imports plus public pressure.

Sovereign gold bonds (SGBs) are government securities, issued by the Reserve Bank of India, whose value is denominated in grams of gold. They were the government's way of steering household demand into “paper gold” that does not need to be imported, and they pay a fixed interest rate on top of the gold-linked redemption value.

SGBs are not the instrument being used to restrict gold buying, and they are not currently a fresh alternative. Reports agree that the last new tranche, the 2023–24 Series IV, was issued in February 2024, and that no new tranche has been announced since. A written reply from the Minister of State for Finance, as reported by Outlook Business, said fresh SGBs are “under consideration” but that issuing new tranches is not appropriate at present, citing geopolitical tension and resource management; we could not find the exact date of that reply. Press analysis has linked the pause to cost: when gold rises, the government's liability on every outstanding bond rises with it.

Existing bonds are unaffected. They continue to pay interest, can be redeemed early after the fifth year on coupon dates, and can be bought and sold on the stock exchanges. One report says that from April 2026 the capital-gains exemption applies only to original subscribers who hold to maturity; check that against the tax rules before you rely on it.

• The headline is large. September gold imports of $1.8 billion were down 81.27% year on year. Over April–September of the 2026–27 financial year, gold imports were down 27.32% to $19.27 billion.
• The cause is not separable. The Commerce Ministry data does not say how much of the fall is the duty and how much is the appeal. The 81% also compares against a year-earlier month that may have been unusually high — look at the monthly series, not one reading.
• Lower imports are not lower demand. One trade body reportedly told the press that the higher duty has pushed some buying into the grey market and that talks on a duty cut are under way. We found no confirmed decision to cut the duty, and the grey-market claim rests on trade-body commentary.
• Domestic prices are not set by the duty alone. They also follow the international gold price and the rupee–dollar rate. Hans India reported local prices jumping sharply after the announcement.
• Who supplies it. Switzerland accounts for about 40% of India's gold imports, the UAE more than 16% and South Africa about 10%.

The mechanism worth noticing is currency pressure. When a government acts to defend its currency, customers' purchasing power and the exchange rate you are paid in can both move quickly. Practical responses are ordinary ones: price in a stable unit, lock the amount for the payment window, and do not hold more exposure to a falling currency than you intend. On Payaries, an invoice's fiat amount is converted when the invoice is created and the rate is locked, so the amount due does not move while the customer pays.

• Government raises gold and silver import duty to 15% after PM Modi's appeal — The Hans India
• India's gold imports crash 81%, silver drops 49% in September — Kotak Neo
• Sovereign gold bond issuance paused since Feb 2024 — Outlook Business
• Indians will pay more for gold after government hikes duty to 15% — Yahoo Finance
• No relief for crypto investors as India retains current crypto tax in Budget 2026 — Decrypt