After gold import duty hike, India weighs more measures to check current account deficit as rupee plummets

India’s Current Account Deficit (CAD) surged to $13.2 billion, or 1.3% of GDP, in the December quarter of 2025-26, up from $11.3 billion the prior year, according to Reserve Bank of India data. The widening deficit stems from a trade gap, particularly a 24% rise in gold imports to $71.98 billion and a 150% jump in silver imports to $12 billion in the last fiscal year, despite a 4.76% volume drop in gold. To curb dollar outflows, the government hiked gold import duties to 15% (effective 18.45% with taxes) and capped imports under the Advance Authorisation scheme at 100 kg. Trade deficits hit a three-month high of $28.38 billion in April due to surging precious metal imports, with gold priced at ₹1,56,000 per 10 grams and silver at ₹2.53 lakh per kg in Delhi. The Indian rupee has depreciated 7% in 2026, becoming one of the worst-performing emerging market currencies, pressured by expensive oil, capital outflows, and a widening trade deficit. India imports 88% of its crude oil, and rising global prices—fueled by stalled Iran-U.S. peace talks—further strain the currency by increasing dollar demand for imports. Foreign Portfolio Investment (FPI) outflows have also weakened the rupee, which is down 6.1% since geopolitical tensions escalated in late February. Commerce Minister Piyush Goyal stated the government is evaluating additional measures to address the deficit, emphasizing coordinated efforts across departments despite global economic challenges.