Gold & Silver Budget 2026: With gold and silver imports hitting records, Budget 2026 may signal higher import duties to protect the rupee and contain the trade deficit.
Gold and Silver Budget 2026 (Photo: File)
Gold & Silver Budget 2026: As Finance Minister Nirmala Sitharaman prepares to present the Union Budget on February 1, 2026, gold and silver imports are emerging as a serious policy concern. The demand for precious metals in India has risen in 2025 despite the record high prices, further squeezing the trade deficit and the rupee with no other alternatives in sight, the markets are eagerly waiting for any indication of a possible rise in import duties in Budget 2026.
Budgetary announcements could push gold prices because of taxes and compliance. The government might make stricter reporting of gold holdings including more information in income tax returns and emphasizing self-reporting. There are rumors about small GST changes in gold, which is currently at 3 percent, but a strict limit on holding gold is not expected because the Gold Control Act has been repealed for many years with an increase in customs duty would increase prices.
The demand for gold and silver in India is fulfilled by imports, as it imports almost all of its gold and over 80 percent of its silver. In 2025, the imports of gold rose by 1.6% to $58.9 billion, while the imports of silver increased by 44% to $9.2 billion and these imports combined contributed to nearly 10% of the foreign exchange reserves of the country. The magnitude of these imports further expands the current account deficit and exerts more pressure on the rupee, which recently recorded record lows.
Even if the volumes remain constant, the sudden spurt in prices increases the import cost the gold has nearly doubled since the beginning of 2025 and silver has moved even faster. The reason cited by traders is that history provides a clue during the 2012-13 rupee crisis, India significantly increased gold duties to improve balances. The current indication of this trend is reflected in the rising domestic premiums.
History suggests that the bite could be not so harsh consider 2013, when the gold import duty was raised to 10% and demand hardly flinched. Going forward, the domestic gold prices have risen from around Rs 8,000 per 10 grams in 2006 to around Rs 1.62 lakh currently, but demand remained strong. It is likely that a 4-6% point hike in the duty rate will not deter demand and may even encourage the parallel market to revive.
Silver’s role has expanded beyond jewellery into solar panels, electronics and batteries while in 2025, silver ETF inflows surged to Rs 234.7 billion, nearly triple the previous year. This growing investment demand, alongside industrial use, has sharply inflated import bills, placing silver firmly on policymakers radar alongside gold.
Even as demand from the consumer side slowed down, the demand from the investment side accelerated. Today, the investment component itself accounts for over 40% of gold demand in India, as opposed to under 25% two years ago and the inflows into gold ETFs saw a massive rise of 283% in 2025, touching Rs 429.6 billion.
If Budget 2026 maintains the status quo, gold prices may remain stable or slightly lower with a reduction in customs duty by 3-5% may reduce prices by Rs 2,000-4,000 for 10 grams, but this appears less likely in the wake of the historic increase in imports. On the MCX, gold has been ranging around Rs 1.49 lakh for 10 grams while silver touched around Rs 2.91 lakh per kg.
