India just handed its gold smugglers the best business plan they’ve had in years. The country raised its gold import duty from 6% to 15% on May 13, and the World Gold Council is now sounding the alarm that the move is backfiring in spectacular fashion.
Official gold imports dropped 23% year-on-year in the second quarter of 2026, falling to just 98.1 tonnes. That’s the lowest quarterly total since Q3 2020. Meanwhile, the grey market is thriving, seizure rates have nearly doubled, and the organized gold trade is watching its market share evaporate.
The arbitrage problem nobody saw coming
According to the World Gold Council, the 15% duty combined with a 3% Goods and Services Tax has created an 18% price arbitrage between official and unofficial channels. Prices for smuggled gold have appeared at discounts of $150 to $200 per ounce compared to official domestic prices, making the risk-reward calculus for grey market participants overwhelmingly attractive.
Domestic gold demand declined 6% year-on-year to 131.4 tonnes in Q2 2026.
