India has tightened regulations governing duty-free gold imports by capping shipments at 100 kilograms under the Advance Authorisation (AA) Scheme, a move aimed at strengthening oversight of the gems and jewellery sector and curbing rising imports.
The Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce and Industry, issued the notification on May 14, introducing stricter conditions for exporters seeking to import gold without paying customs duty.
The revised rules come shortly after the Centre sharply increased customs duties on gold and silver imports from 6 per cent to 15 per cent, signalling a broader policy push to reduce pressure on India’s trade deficit and foreign exchange reserves.
Industry representatives, however, have cautioned that the tighter norms could affect exporters and increase compliance burdens for businesses, particularly smaller players.
Tighter Gold Import Rules
The Advance Authorisation Scheme allows exporters to import raw materials duty-free on the condition that they are used to manufacture products meant for export. The scheme has long been used by India’s jewellery exporters, enabling them to import gold without upfront customs duties and remain competitive in global markets. Until now, there was no fixed quantity limit on duty-free gold imports under the programme.
Under the revised framework, the DGFT has capped imports at 100 kilograms of gold per authorisation. First-time applicants seeking licences under the scheme will also face mandatory physical inspections of their manufacturing facilities before approvals are granted. In addition, exporters applying for fresh authorisations will now be required to fulfil at least 50 per cent of their existing export obligations before becoming eligible for another licence.
The DGFT stated in its public notice that the changes were aimed at ensuring “greater accountability and effective monitoring” of imports under the scheme. Exporters will now have to submit fortnightly reports certified by an independent chartered accountant detailing the quantity of gold imported, its utilisation and export performance. Regional DGFT offices have also been instructed to send monthly compliance reports for centralised monitoring.
Officials believe the new safeguards will help reduce misuse of the scheme and improve traceability in the sector. According to trade experts, authorities have increasingly become concerned that loopholes in duty-free import schemes could contribute to excessive imports and speculative stockpiling of gold.
Government Tightens Gold Imports
India is one of the world’s largest consumers and importers of gold, with demand driven by jewellery consumption, investment purchases and cultural practices. However, high gold imports also contribute significantly to the country’s trade deficit because most of the metal is sourced from overseas markets.
Government data shows that India’s gold imports surged significantly in the last financial year, raising concerns within the Centre about pressure on foreign exchange reserves and the current account deficit. Analysts say the sharp rise in imports was partly driven by volatility in global markets and investor demand for gold as a safe-haven asset amid geopolitical uncertainty.
The latest decision follows the Centre’s recent move to increase customs duties on gold and silver imports from 6 per cent to 15 per cent. Economists believe the government is attempting to discourage non-essential imports while strengthening oversight mechanisms in sectors where import volumes have risen sharply.
A senior government official quoted by Reuters said the policy changes were intended to ensure that duty-free imports are “strictly linked to genuine export requirements”. The official added that authorities were trying to strike a balance between supporting exporters and maintaining macroeconomic stability.
Exporters Concerned Over Stricter Rules
Industry stakeholders have reacted cautiously to the new restrictions, warning that increased compliance requirements may create operational difficulties for exporters. India’s gems and jewellery sector employs millions of workers directly and indirectly, including artisans, small manufacturers and traders concentrated in cities such as Mumbai, Surat, Jaipur and Kolkata.
Exporters argue that while transparency and monitoring are important, additional paperwork and procedural checks could slow business operations and reduce competitiveness in global markets. Representatives from the Gem and Jewellery Export Promotion Council (GJEPC) have reportedly sought further clarification from the government regarding implementation timelines and operational details.
According to industry data, India’s gold jewellery exports stood at approximately USD 11.36 billion in FY 2025–26. Exporters fear that delays in obtaining fresh licences or increased scrutiny could affect production cycles and shipment schedules, especially for smaller firms that rely heavily on quick access to imported raw materials.
Bullion dealers and market analysts also note that repeated increases in import duties, combined with stricter import regulations, could widen the gap between domestic and international gold prices. Some experts warn that such differences may encourage unofficial trade channels or smuggling if legal imports become too expensive or cumbersome.
At the same time, others believe stronger monitoring could improve the credibility of the sector by ensuring that duty-free benefits are not misused. Several economists have argued that tighter regulations may ultimately help formalise the industry and strengthen long-term compliance standards.
The Logical Indian’s Perspective
The government’s decision reflects the difficult balancing act between protecting India’s economic interests and safeguarding the livelihoods of millions connected to the gems and jewellery industry. Strengthening accountability in trade and ensuring that public schemes are not misused are legitimate goals, particularly during periods of economic uncertainty and rising import bills.
The jewellery industry is deeply linked to employment, craftsmanship and cultural identity across India. Sudden regulatory changes without adequate consultation or support mechanisms can create uncertainty for businesses already navigating global market pressures. Transparent dialogue between policymakers, exporters, labour representatives and trade bodies will be essential to ensure that reforms achieve their intended purpose without weakening livelihoods or export growth.
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