India has tightened its import rules for gold and silver alloys, closing a major loophole that allowed duty exemptions under trade agreements. The Finance Bill 2025, unveiled on the eve of the Union Budget, introduced new tariff classifications effective May 1, ensuring that high-purity gold and silver alloys face a 10% import duty.

Effective 1st May 2025 new tariff lines created will be based on precious metal content. There will be no change to effective rates.

“GJEPC welcomes the proposal of creating of new tariff items in Chapter 71 so as to distinguish precious metals – containing 99.9% or more by weight of silver, containing 99.5% or more by weight of gold, containing 99% or more by weight of platinum under headings 7106, 7108 and 7110 respectively. This move aligns with the representation made by GJEPC for addressing the issue of classification of alloys of platinum (pre-dominantly containing gold), which was invariably leading to claim of unwarranted customs duty exemptions under India UAE CEPA,” Gem and Jewellery Export Promotion Council (GJEPC) said.

Essentially, according to industry sources, many importers were avoiding the import duty on gold and silver by classifying the items as alloys (even when they were 99% gold or silver).  Today’s proposal aims to plug the loophole.

Trade data for November 2024 released on Dec 16 revealed a record high in India’s trade deficit, largely driven by a surge in gold imports. Initial estimates showed that gold imports reached $14.8 billion, accounting for 21% of total merchandise imports. Despite downward revisions to these numbers, gold imports remain elevated.

The revised tariff structure now brings greater clarity to precious metal imports and is expected to curb excessive inflows while protecting India’s external balances.

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