India has seen a sharp rise in gold imports in recent years, placing pressure on the country’s economy. In the fiscal year 2025-26, India’s gold imports increased by more than 24%, reaching a record $71.98 billion. In comparison, India imported $58 billion in 2024-25 and $45.54 billion in 2023-24.
Impact on Trade Deficit and Foreign Exchange Reserves
The surge in gold imports is negatively affecting India’s trade deficit and foreign exchange reserves. In 2025-26, India’s trade deficit increased to $333.2 billion. The current account deficit (CAD) also took a hit, further straining the country’s financial position. According to the Reserve Bank of India (RBI), CAD reached $13.2 billion (1.3% of GDP) during the October-December quarter.
India’s Gold Import Sources
Switzerland is India’s largest source of gold, accounting for nearly 40% of imports. The United Arab Emirates (UAE) follows with over 16%, and South Africa contributes about 10%. In 2025-26, the value of imports from Switzerland rose by 11.36%, reaching $24.27 billion.
Government Takes Action to Curb Gold Imports
The government has implemented measures to control the import of gold, silver, and platinum. This move aims to prevent misuse of free trade agreements (FTAs) and curb illegal gold imports. Some traders have exploited the tariff differences, importing unprocessed gold through countries like Thailand to avoid higher duties. In 2022, the import duty on gold was raised from 10.75% to 15%. However, in the 2024-25 Budget, it was reduced to 6% to boost the jewelry industry and curb smuggling.
Experts Raise Concerns About FTA Impact
The Global Trade Research Initiative (GTRI) has urged the government to review FTAs, particularly the India-UAE trade agreement. Under this agreement, gold from the UAE can be imported at a reduced rate, 1% lower than the normal tariff. GTRI founder Ajay Srivastava noted that after the duty reduction in 2024, gold from Dubai entered India with an effective tariff of only 5%.
Rapid Increase in Gold Imports from UAE
The UAE’s share in India’s gold imports has increased rapidly. In 2022, India imported $2.9 billion worth of gold from the UAE, which grew to $6.7 billion in 2023 and $16.5 billion in 2025. Prior to the FTA, Dubai’s share was just 7.9%, but it will rise to 28% by 2025. Experts warn that this trend is concerning because the UAE neither mines nor processes gold. Most of the gold appears to come from third-party countries routed through Dubai, benefiting from India’s lower import duties.
GTRI Calls for Stricter Regulations
To protect India’s trade balance and forex reserves, GTRI recommends tightening regulations and reviewing FTAs. They also suggest excluding gold, silver, platinum, and diamonds from future trade agreements to prevent further damage to India’s economy. These steps aim to safeguard India’s financial stability in the face of growing gold imports.
