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Nirmala Sitharaman’s Union Budget 2026 kept gold import duty unchanged despite a 27.4% rise in gold imports, citing balanced policy amid global price and demand pressures.
By Anshul February 1, 2026, 7:19:36 PM IST (Published)
2 Min Read
The Union Budget 2026 presented on Sunday by Finance Minister Nirmala Sitharaman made no change to the import duty on gold, even as concerns persist over rising gold imports and their impact on India’s trade balance.
The government retained the existing duty structure, signalling that it does not see an immediate need to use tariff policy to curb gold inflows. Officials indicated that the current framework balances revenue considerations with domestic demand and industry interests.
The Finance Ministry said the decision reflects a preference to monitor external sector pressures rather than intervene through abrupt tax changes, especially when global gold prices remain elevated and demand dynamics are influenced by factors beyond domestic policy.
Why gold imports are in focus
According to the Economic Survey 2025–26, India’s gold imports rose 27.4% year-on-year in FY25, highlighting the metal’s continued pull on domestic demand despite record-high global prices.
The Survey noted that gold, along with petroleum crude and petroleum products, continues to dominate India’s import basket — together accounting for over one-third of total imports. Among these, gold stands out as a non-essential import that typically rises during periods of global uncertainty, adding pressure on the trade balance.
Impact on trade and current account
The Economic Survey cautioned that rising gold imports during a phase of elevated global prices have contributed to stress on India’s current account deficit (CAD). While higher prices have increased the import bill in value terms, strong domestic demand has prevented import volumes from moderating significantly.
Heightened global risk sentiment — driven by geopolitical tensions, trade uncertainty, and expectations of negative real interest rates — has pushed investors worldwide toward safe-haven assets such as gold, reinforcing demand in India.
Gold’s growing domestic role
The Survey also highlighted a sharp increase in loans against gold jewellery, indicating that households are increasingly monetising their holdings amid rising prices. While this has supported credit growth — particularly in personal loans and MSME financing — it has also expanded gold’s economic footprint and its influence on India’s external sector.
