Gold, Silver ETFs Surge Up To 5% After Government Raises Import Duty To 15%
New Delhi, May 13: Gold and silver exchange-traded funds (ETFs) witnessed a sharp rally on Wednesday after the Indian government increased the effective import duty on precious metals from 6 per cent to 15 per cent, leading to a rise in domestic bullion prices.
The Centre announced late on May 12 that the basic customs duty on gold and silver imports would be increased from 5 per cent to 10 per cent. Additionally, the Agriculture Infrastructure and Development Cess (AIDC) was raised from 1 per cent to 5 per cent. The revised duty structure came into effect from May 13.
Following the announcement, investors rushed towards precious metal ETFs as higher import duties are expected to increase domestic prices of gold and silver.
Gold ETFs recorded strong gains during early trade. Tata Gold ETF climbed 4.65 per cent, while Nippon India Gold BeES rose 4.66 per cent. Groww Gold ETF advanced 4.83 per cent and ICICI Prudential Gold ETF gained 4.88 per cent.
Other major gold ETFs also traded higher, with SBI Gold ETF rising 4.84 per cent, HDFC Gold ETF gaining 4.58 per cent and Kotak Gold ETF moving up 4.84 per cent. Zerodha Gold ETF and Angel One Gold ETF also posted solid gains.
Silver ETFs outperformed gold funds during the session. Tata Silver ETF surged 5.43 per cent, while Nippon India Silver ETF gained 5.35 per cent. Groww Silver ETF rose 5.39 per cent and HDFC Silver ETF climbed 5.46 per cent.
ICICI Prudential Silver ETF, SBI Silver ETF, Kotak Silver ETF and Aditya Birla Sun Life Silver ETF also registered gains of over 5 per cent after the duty hike announcement.
Market experts explained that gold and silver ETFs closely track domestic bullion prices. Since India imports a significant portion of its precious metal requirements, any increase in customs duty directly raises the landed cost of imports, pushing up local prices.
The latest duty revision is expected to support domestic bullion prices in the near term, resulting in strong investor buying across gold and silver ETFs.
Analysts believe the move could also impact jewellery demand and increase volatility in bullion markets as traders assess the long-term impact of higher import costs on consumption and investment trends.
