Gold Smuggling in India has jumped to its highest level in three years. The cause is a steep rise in import duty. Gold shipped into India through unofficial routes hit 50 tons in the July-September quarter. A year ago, the figure was only 3 tons. The World Gold Council says this is a jump of over 1,500%.
The data comes from the research firm Metals Focus. It shows that higher taxes are pushing more gold into unofficial hands. Some gold enters through smuggling networks, while some is brought in by travelers who violate customs rules.
In May 2026, the government raised the import duty on gold and silver from 6% to 15%. It wanted to cut demand, protect foreign exchange reserves, and bring down the trade deficit, which has grown as energy prices stay high.
But the higher duty has created a big price gap. Legal gold now costs much more than gold brought in through secret routes. That makes smuggling more tempting. The WGC says earlier duty hikes caused the same problem.
India is the world's second-largest buyer of gold. Families buy it for weddings, festivals, and savings. The country produces very little gold, so it must import almost all of it.
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The trend is also changing how people buy jewelry. More families are paying in cash and skipping the bill. This makes it hard to track sales or collect tax.
Overall gold demand rose from the last quarter, though most measures are still below last year. Diwali and the wedding season could lift sales in the final three months of the year.
Still, jewelers are careful about stocking up. Gold fell 6.8% in October and dropped below USD 4,000 an ounce, so many are waiting to see where prices go next.
The rise in informal trade poses a challenge for the government. It loses tax money and finds it harder to enforce rules. Registered jewelers also suffer, as they must compete with sellers who pay no duty and charge less. Unless the price gap narrows, illegal gold imports could continue to increase.