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India's Gold Shadow Market Thrives Amid High Prices and Taxes
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Moneycontrol•29-09-2026, 21:03
India's Gold Shadow Market Thrives Amid High Prices and Taxes
- •High gold prices and increased taxes are pushing Indian buyers towards under-the-counter cash transactions for gold and jewelry, bypassing official invoices.
- •Cash purchases can offer bulk buyers discounts of up to 6% on market prices, as dealers avoid taxes and pass savings to customers.
- •The informal trade has surged since the government more than doubled import levies on gold and silver to 15% and added a 3% goods and services tax.
- •This resurgence is an unintended consequence of policies aimed at curbing India's gold imports, which heavily contribute to the trade deficit.
- •Traders in the cash market can source gold at significant discounts, reflecting the economic incentives created by higher import duties for unofficial supply channels.
Key Questions Answered
High gold prices and steep taxes, including import levies doubled to 15% and a 3% goods and services tax, are driving buyers into cash sales to bypass taxes and secure discounts.
Bulk buyers in the cash market have sourced gold at discounts of up to $200 an ounce, while some retail shoppers secured savings of up to Rs 10,000 per 10 grams.
India's trade deficit widened to nearly $32 billion in July, with shipment bills surging over 32% in the four months through July, prompting the Prime Minister to urge citizens to conserve foreign-exchange reserves.
