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What is the story about?
India’s gold imports surged sharply in FY25 despite all-time global prices, stressing the metal’s persistent pull on domestic demand and its growing impact on the country’s trade balance, according to the Economic Survey 2025–26.
The Survey shows that gold imports rose 27.4% year-on-year in FY25, driven by a combination of elevated global prices and resilient domestic consumption. The increase came even as gold prices climbed steeply amid global financial volatility, highlighting gold’s unique status in Indian households as both a store of value and a financial asset.
The Survey notes that India’s import basket continues to be dominated by petroleum crude, gold, and petroleum products, which together account for over one-third of total imports. Among these, gold stands out as a non-essential import that tends to rise during periods of global uncertainty, adding pressure on the trade balance.
According to the Survey, rising gold imports during a phase of high global prices have contributed to stress on India’s current account deficit (CAD). While higher prices increase the import bill in value terms, strong domestic demand has prevented volumes from moderating meaningfully, even as prices reached historic highs.
The Survey links this sustained demand partly to heightened global risk sentiment. As geopolitical tensions, trade policy uncertainty, and expectations of negative real interest rates drove investors worldwide towards safe-haven assets, Indian households also increased gold purchases, reinforcing import demand.
Gold’s growing role in domestic finance has further amplified this trend. The Survey highlights a sharp rise in loans against gold jewellery, reflecting households’ willingness to monetise gold holdings amid rising prices. While this has supported credit growth—particularly in personal loans and MSME financing—it has also reinforced gold’s economic footprint, including on the external sector.
At the macro level, the Survey cautions that elevated gold imports, when combined with volatile energy prices, can complicate external sector management. Even as India’s foreign exchange reserves remain comfortable, sustained increases in the gold import bill can widen the trade deficit during periods of global stress.
The Survey also flags that gold-related price pressures have spilled over into core inflation, though it clarifies that excluding precious metals, underlying inflation trends remain moderate. This suggests that gold’s impact is concentrated rather than broad-based—but still significant for trade and price dynamics.
Looking ahead, the Economic Survey suggests that unless global uncertainties ease meaningfully, demand for gold is likely to remain firm, keeping imports elevated. The persistence of geopolitical risks and unresolved trade tensions could continue to support gold’s appeal, even at high price levels.
Catch LIVE updates on Economic Survey here
The Survey shows that gold imports rose 27.4% year-on-year in FY25, driven by a combination of elevated global prices and resilient domestic consumption. The increase came even as gold prices climbed steeply amid global financial volatility, highlighting gold’s unique status in Indian households as both a store of value and a financial asset.
The Survey notes that India’s import basket continues to be dominated by petroleum crude, gold, and petroleum products, which together account for over one-third of total imports. Among these, gold stands out as a non-essential import that tends to rise during periods of global uncertainty, adding pressure on the trade balance.
According to the Survey, rising gold imports during a phase of high global prices have contributed to stress on India’s current account deficit (CAD). While higher prices increase the import bill in value terms, strong domestic demand has prevented volumes from moderating meaningfully, even as prices reached historic highs.
The Survey links this sustained demand partly to heightened global risk sentiment. As geopolitical tensions, trade policy uncertainty, and expectations of negative real interest rates drove investors worldwide towards safe-haven assets, Indian households also increased gold purchases, reinforcing import demand.
Gold’s growing role in domestic finance has further amplified this trend. The Survey highlights a sharp rise in loans against gold jewellery, reflecting households’ willingness to monetise gold holdings amid rising prices. While this has supported credit growth—particularly in personal loans and MSME financing—it has also reinforced gold’s economic footprint, including on the external sector.
At the macro level, the Survey cautions that elevated gold imports, when combined with volatile energy prices, can complicate external sector management. Even as India’s foreign exchange reserves remain comfortable, sustained increases in the gold import bill can widen the trade deficit during periods of global stress.
The Survey also flags that gold-related price pressures have spilled over into core inflation, though it clarifies that excluding precious metals, underlying inflation trends remain moderate. This suggests that gold’s impact is concentrated rather than broad-based—but still significant for trade and price dynamics.
Looking ahead, the Economic Survey suggests that unless global uncertainties ease meaningfully, demand for gold is likely to remain firm, keeping imports elevated. The persistence of geopolitical risks and unresolved trade tensions could continue to support gold’s appeal, even at high price levels.
Catch LIVE updates on Economic Survey here
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