India’s gold prices, already influenced by strong domestic demand and global trends, could see a significant spike if the government decides to raise the customs duty in the upcoming Budget 2025. However, the World Gold Council warns that reversing last July’s import duty cut on gold in the upcoming Budget could undermine the industry’s recent gains, urging caution against raising tariffs.
In an exclusive interview with News24, 1983-batch IAS officer and former finance secretary of India, Subhash Chandra Garg hinted that when could the gold price shoot up to Rs 1 Lakh Per 10 Grams.
Garg said, “India’s gold rates are driven by immense demand, but gold is largely imported. As a result, gold prices in India are determined by three key factors: the global gold price in dollars, customs duty imposed by the government, and the profit margin added by jewelers and other intermediaries.”
“In the Budget 2024, presented in July, the government slashed the total customs duty on gold from 15% to 6%. If the government increases the customs duty on gold to 10%, 15%, or 14% in budget 2025, the trade and industry will promptly pass on this additional cost to consumers, leading to a rise in gold prices,” remarked Garg.
Furthermore, Garg said, “Gold prices are primarily driven by international prices, not just duties.”
“However, If the government increases the custom duty on gold from 6% to 15%, gold prices may shoot up to Rs 1 lakh per 10 grams in very less time after the budget announcement. If the duty remains unchanged, it may take around six months to a year for gold prices to reach that higher level,” he further added.
