India's Illegal Gold Imports Surge Over 1,500% To 50 Tonnes As Higher Import Duty Fuels Unofficial Trade: WGC

India's unofficial gold imports reached their highest level since 2023 during the July-September quarter, following a sharp increase in import duties, according to the World Gold Council (WGC).

Citing estimates from consultancy Metals Focus, the WGC reported that informal gold inflows rose more than 1,500% to 50 metric tonnes, compared with three tonnes during the corresponding quarter last year.

The report did not explain how these unofficial shipments were measured.

Duty Cut Not Warranted On Gold, Pulses And Edible Oil Imports

India's informal bullion market has expanded since the government more than doubled import duties on gold and silver to 15% earlier this year.

The increase was intended to discourage imports as higher energy costs widened India's trade deficit.

According to the WGC, higher taxation can encourage traders to bypass official import channels.

Unofficial inflows may involve smuggling or smaller quantities carried into the country by individuals without paying applicable duties.

The report also highlighted an increase in cash transactions involving gold and jewellery without formal invoices.

Such transactions can make it harder for authorities to trace purchases and monitor compliance.

India, the world's second-largest gold consumer, depends heavily on overseas supplies because domestic production remains limited.

Gold imports consequently contribute significantly to the country's import bill and can affect its currency.

Gold remains central to Indian weddings, religious celebrations and family savings, supporting demand for jewellery and investment products.

Although overall consumption increased from the preceding quarter, several indicators showed weaker demand compared with the corresponding period last year.

Purchases typically strengthen during the December quarter as festivals, including Diwali, encourage spending.

However, uncertainty over prices could limit the expected seasonal recovery.

According to India's largest precious metal refiner, jewellers have delayed purchases because they expect prices to decline further.

Gold prices dropped 6.8% in October, falling below $4,000 an ounce.

The metal subsequently continued trading beneath that threshold, according to the report.

The WGC's findings suggest that higher import duties and changing price expectations are influencing both official trade flows and purchasing behaviour across India's gold market.