The World Gold Council has warned that India’s decision to hike import tariffs on gold is inadvertently fueling a boom in the grey market. By raising total duties to 15%—plus a 3% GST—the government has created an 18% price gap, which is providing a lucrative incentive for illegal operators. According to Sachin Jain, CEO of the WGC’s India operations, this massive arbitrage opportunity is not only disrupting the formal sector but also severely disadvantaging legitimate, organized jewelry retailers who struggle to compete with untaxed imports.

Recent government data supports these concerns, showing a sharp spike in gold seizures by enforcement agencies immediately following the policy change. While smuggling had seen a notable decline in previous years due to tax adjustments, officials now fear that illicit inflows could potentially climb past 100 tons in 2026 if the current duty structure persists. Consequently, the organized gold trade is feeling the squeeze, with official import volumes dropping to their lowest levels since 2020 as high prices and market disruptions dampen consumer demand.