India’s Gold Imports Defy Price Hikes and Jump 34% as Silver Takes a Massive Hit

Skyrocketing prices are doing absolutely nothing to dampen India’s obsession with the yellow metal. Despite record-breaking global and domestic valuations, gold imports into the country surged by a massive 34% year-on-year this past May, reaching $3.41 billion (roughly Rs. 32.22 thousand crore). Interestingly, while buyers aggressively stocked up on gold, silver witnessed an unexpected crash. Inbound shipments for the white metal plunged 86.65%, dropping to a mere $75.57 million (Rs. 714 crore) during the exact same period.

A 15% Import Duty Fails to Slow Demand
Just last month, the central government tried to hit the brakes on this buying frenzy. Authorities hiked the import duty on precious metals from a modest 6% to a steep 15%. The goal was clear: restrict consumption and tighten the inflow of foreign shipments. The strategy simply did not work. Looking at the broader picture for the first two months of the current fiscal year (April-May 2026-27), inbound shipments of gold actually jumped by an astonishing 60.14%, totaling $9.04 billion (Rs. 85.42 thousand crore).

What is Driving This Massive Consumption?
As the second-largest consumer of gold globally, right behind China, India relies heavily on its massive jewelry sector. The bustling wedding season continues to be the primary engine keeping this demand alive, forcing jewelers to maintain heavy inventories regardless of the cost. Historically, Switzerland has served as the top supplier for these massive orders. However, recent trade data indicates a slight dip in Swiss shipments, even as overall inward volumes from other global sources continue to climb.

The Growing Threat to the Economy
While local jewelers and everyday buyers keep the retail market active, financial analysts are raising red flags. This heavy appetite for precious metals carries a severe macroeconomic cost. The immediate consequence was felt in May, when the national trade deficit swelled to $28.21 billion. Paying for billions of dollars worth of imported gold drains foreign exchange reserves rapidly. Experts warn that if this unchecked outflow of dollars continues, it will place immense pressure on India’s Current Account Deficit (CAD), creating deeper economic challenges in the months ahead.