A day after sharply increasing import duties on precious metals, the Indian government on Thursday imposed a cap of 100 kilograms on gold imports under the Advance Authorisation (AA) scheme. The move is aimed at tightening monitoring mechanisms and preventing possible misuse of the duty-free import facility available to jewellery exporters, as reported by Press Trust of India.
According to Press Trust of India (PTI), the government has revised the conditions governing the issuance and supervision of advance authorisations for gold imports. Earlier, there was no upper limit on the quantity of gold that could be imported under the scheme.
The Advance Authorisation scheme permits duty-free imports of raw materials and inputs used in the manufacture of export products. Apart from production inputs, exporters are also allowed to import packaging material, fuel, oil, and catalysts consumed during the manufacturing process without paying customs duty.
In a public notice, the Directorate General of Foreign Trade (DGFT) stated, "AA for import of gold shall be issued, subject to a maximum remissible quantity of 100 kilograms."
According to PTI, the DGFT has also introduced stricter compliance requirements for first-time applicants seeking permission under the scheme. The public notice stated that a mandatory physical inspection of the applicant’s manufacturing facility would now be carried out to verify the existence, operational status, and production capacity of the unit.
The notification further stated, "Any subsequent AA for the import of gold, shall be considered for issuance only upon fulfilment of at least 50 per cent of the export obligation..."
Additionally, AA holders will now be required to submit a fortnightly performance report certified by an independent chartered accountant, detailing gold imports and exports undertaken under the authorisation.
Press Trust of India reported that the concerned regional authority of the DGFT will also be required to submit monthly reports regarding the issuance of advance authorisations to ensure tighter oversight and monitoring.
Sources cited by PTI indicated that the government introduced these restrictions amid concerns that the scheme could be exploited to import large quantities of gold quickly and benefit from price arbitrage opportunities.
The sources further stated that the new measures were intended to prevent any potential misuse of the Advance Authorisation scheme.
The latest restrictions come immediately after the Centre significantly increased import duties on gold, silver, and platinum on Wednesday. The move was introduced to discourage non-essential imports and reduce pressure on India’s growing import bill amid the ongoing West Asia crisis.
Effective May 13, import duty on gold and silver was increased from 6 per cent to 15 per cent, while platinum duty was raised from 6.4 per cent to 15.4 per cent. Consequential revisions were also made to duties on gold and silver dore, coins, findings, and related products.
According to PTI, imports of gold and silver surged 26.7 per cent year-on-year to USD 102.5 billion in FY2025-26, with their share in India’s total imports increasing to 14 per cent compared to 11.8 per cent during 2024-25.
The duty increase came shortly after Prime Minister Narendra Modi urged citizens to reduce avoidable foreign exchange expenditure and called for restraint in gold purchases alongside other austerity measures.
India remains the world’s second-largest gold consumer after China, with demand primarily driven by the jewellery industry. Such imports contribute significantly to foreign exchange outflows.
Press Trust of India noted that the Indian rupee had fallen to a record low of 95.75 against the US dollar on Tuesday before recovering some ground after the import duty announcement.
Following Wednesday’s revisions, the basic customs duty on gold was doubled to 10 per cent, while the Agriculture Infrastructure and Development Cess (AIDC) was increased fivefold from 1 per cent to 5 per cent. This pushed the effective import duty on gold and silver to 15 per cent.
In addition to this, importers are also required to pay a 3 per cent Integrated Goods and Services Tax (IGST), taking the total effective duty burden to 18.45 per cent compared to 9.18 per cent earlier.
India’s gold imports rose more than 24 per cent to a record USD 71.98 billion during FY2025-26. However, in terms of volume, imports declined 4.76 per cent to 721.03 tonnes during the same period.
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