India Hikes Gold Import Tariffs, Sells Dollars as Iran War Drives $20 Billion Outflows
Updated
Updated · Reuters · May 13
India Hikes Gold Import Tariffs, Sells Dollars as Iran War Drives $20 Billion Outflows
1 articles · Updated · Reuters · May 13
India has rolled out crisis-style defenses against the Iran war shock, raising tariffs on precious metal imports and using central-bank dollar sales to slow pressure on the rupee and foreign-exchange reserves.
The measures follow a severe external squeeze: India imports about 90% of its oil, the rupee has fallen more than 5% to a record low, and foreign investors have pulled over $20 billion from equities since the war began.
Economists now see the energy shock widening the current account deficit to 2.5% of GDP in the year ending March 2027 from 0.9% a year earlier, while growth forecasts are being cut and inflation estimates raised.
Narendra Modi has urged steps to conserve foreign exchange, underscoring fears that India could face a third straight year of balance-of-payments deficits even though it entered the crisis with stronger growth and subdued inflation.
Is PM Modi's public appeal for austerity a necessary sacrifice or a dangerous signal of weakness to global markets?
As India is labeled 'Fragile 1,' are its crisis measures a real cure or a temporary fix for its deep economic flaws?
Could the devastating Iran war paradoxically become the catalyst India needs to finally achieve true energy independence?
India’s sharp increase in gold and silver import tariffs in May 2026 is a direct response to severe macroeconomic pressures caused by escalating global geopolitical events, especially the ongoing Middle East conflict and the shutdown of the Strait of Hormuz. These disruptions have led to higher oil prices, weakening the rupee and widening the current account deficit. Earlier, a 3% tax on bullion imports had already caused banks to halt purchases, pushing import volumes to historic lows. The new tariff aims to curb non-essential imports, conserve foreign exchange, and stabilize the economy amid these global and domestic challenges.