India’s Gold Trade: Recommendations for the Path Forward in 2025

Sundaravalli Narayanaswami

IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: This paper examines India’s gold trade dynamics in the context of expectations of a rise in customs duty rates in the Union Budget 2025-26. The persistent demand for physical gold in India, which has remained inelastic over time, is largely met through imports due to limited domestic sources. The Government of India has attempted to regulate gold imports through customs duty adjustments, but our findings reveal that such measures have limited long-term effectiveness. Instead, higher rates encourage imports which utilise multi-duty structures. We argue for a structural shift in policy, including eliminating duty differential for all gold-based commodities, fostering strategic mining partnerships with resource-rich nations, and introducing short-term tax amnesty schemes to monetize household gold holdings. Furthermore, our analysis emphasizes the need to complement import management strategies with efforts to enhance exports, particularly in the gems and jewellery sector, which faces significant structural challenges.

Date: 2025-01-13
New Economics Papers: this item is included in nep-int and nep-mac
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.iima.ac.in/sites/default/files/2025-01/Working_Paper.pdf English Version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iim:iimawp:14719

Access Statistics for this paper

More papers in IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department Contact information at EDIRC.
Bibliographic data for series maintained by ().