INDIA’S sharp increase in gold import tariffs is fuelling a resurgence in smuggling that could exceed 100 metric tonnes this year, as soaring grey market margins allow smugglers to undercut banks and refiners of the precious metal, industry officials and bullion dealers said.
India, the world’s biggest gold market after China, more than doubled import tariffs to 15 per cent in May to curb demand, cut the trade deficit and ease pressure on the rupee. But the move has created an opportunity for smugglers who are able to offer prices legitimate importers cannot match, they said.
The grey market discount has gone beyond $200 per ounce, or more than 4pc, said a Mumbai-based bullion division head at a private gold importing bank, adding that banks were unable to offer even a $10 discount, let alone one of three digits. He declined to be named because he was not authorised to speak to media.
The recent resurgence in the grey market suggests illegal imports could exceed 100 tonnes in 2026, said another dealer who also declined to be identified because he was not authorised to speak to the media.
Four other dealers interviewed by Reuters shared the view that illegal gold imports could exceed 100 tonnes in 2026.
At current prices, 100 tonnes of gold would be worth about $14.35 billion, implying roughly $2.65bn in lost tariffs and sales tax.
Smugglers can offer steep discounts because they do not pay taxes on gold, including import tariffs and goods and services tax that total 18.45pc, the bullion dealers said.
“There’s a margin of more than 2.5 million rupees ($26,121.25) on bringing in a one-kilo bar, which is roughly the size of an iPhone. It is natural that people will try to make quick bucks,” the second dealer said. “Even if grey-market operators sell at a 4pc discount, they are still making a killing,” said a Kolkata-based bullion dealer.
Gold smuggling fell from 156.1 tonnes in 2023 to 69.2 metric tonnes the following year, and declined further in 2025 to 20.4 tonnes after India cut import duties on gold.
Before the duty cut, an average of 108 metric tonnes of the precious metal was smuggled into the country each year over the previous decade, according to data compiled by the World Gold Council.
India imported 45.6 tonnes of gold in April, but imports may have halved in May as banks and refiners scaled back overseas purchases amid deep discounts, said a Hyderabad-based bullion dealer.
&uuid=(email))