India Puts Dollar Above Gold in Its New Economic Policy

The Indian government has taken a decisive economic decision that reflects a strategic shift in its fiscal priorities, as it decided to significantly raise gold import duties from 6% to 15%, in an apparent attempt to reduce dependence on the precious metal and preserve US dollar reserves. India faces a complex economic challenge in that it relies almost entirely on gold imports to meet high domestic demand, both for investment and for cultural uses in Events and weddings Official figures show that gold imports reached a record level of $71.98 billion over the period 2025-2026, accounting for almost 9-10% of India's total import bill. The government decision aims to achieve huge financial savings of up to $20-25 billion annually if it succeeds in reducing gold imports by 30-40%. These savings will directly contribute to supporting the stability of the Indian Rupee and relieving pressures on the Foreign exchange reserves. The decision was immediately reflected on local markets, as gold prices saw a sharp rise of more than 6% on commodity exchanges, which directly affected jewelry prices in retail markets. This rise puts additional pressures on Indian consumers who view gold as an integral part of their investment and social culture. Despite the expected benefits, the new policy raises fears of possible negative repercussions, most notably the possibility of An active black market and the return of cross-border gold smuggling. Industry experts also warn of a negative impact on the jewellery industry, which relies heavily on seasonal sales and cultural events. Through this policy, the Indian government seeks to redirect the market towards less depleting alternatives to hard currency, such as recycling used gold and investing in gold ETFs, with the aim of building a more sustainable economic model that is less vulnerable to fluctuations Global markets