One day after vehemently denying speculation that India plans to raise duties on gold and silver imports following ​Prime Minister Narendra Modi’s urging people to ​avoid buying ​gold for a year ‌due ⁠to the impact of the Iran war, India did in fact raise import tariffs on gold and silver in an attempt to defend its currency, a surprise move as the country races to limit the damage from the Middle East war and to shore up foreign-exchange reserves.

The government has more than doubled import taxes on gold and silver to about 15% from 6%, according to two official orders, imposing a 10% basic customs duty alongside a 5% agriculture infrastructure and development levy.

The hikes, aiming to dampen demand in the world’s second-largest bullion market, followed a rare weekend appeal from Prime Minister Narendra Modi in which he urged citizens to forgo gold purchases as well as unnecessary foreign travel in order to help hold up the currency. The Indian rupee has plunged more than 6% in 2026 with most of the losses occurring after the Iran war started; the currency is on pace to drop to 100 vs the US dollar in the coming weeks.

New Delhi is also weighing other emergency steps, including raising fuel prices and curbing non-essential imports like electronic goods.

India, the world’s third-largest oil importer, has been hit hard by the inflationary shock caused by energy disruptions in the Persian Gulf. 

Higher import bills have driven sharp foreign-exchange outflows, pushing the rupee down to a record low and prompting the Reserve Bank of India to step in and sell dollars. And the fact that gold is the country’s largest import item after crude oil does not help, which is why India is doing everything in its power to limit capital outflows. 

Gold is deeply ingrained in Indian culture and plays a vital role in savings, weddings and religious festivals. India meets almost of all its demand through imports, with 710 tons of gold coming in last year. 

Of course, attempts by the government to limit capital outflows via precious metals will only encourage the population to find alternative mechanisms to preserve purchasing power, and it is only a matter of time before India joins the rest of the financially suppressed developing world in actively pursuing such non-fiat alternatives as tether and bitcoin if the traditional gold and silver pathways are limited.