The brokerage said India’s official monthly gold imports have declined sharply since May 2026 despite broadly stable domestic gold prices since February 2026.
The brokerage’s note charted the sharp decline in value of imports in calendar years 2022 to 2026. The chart highlighted the sharp decline in monthly gold imports:
| Month | Value of gold imports |
| February 2026 | $7.4 billion |
| March 2026 | $3.1 billion |
| April 2026 | $5.6 billion |
| May 2026 | $3.4 billion |
| June 2026 | $2 billion |
| July 2026 | $4.2 billion |
| August 2026 | $2.3 billion |
As per Kotak’s note, the sharp decline may reflect:
- Lower structural gold purchases by households deterred by higher gold import duties from May 13, 2026.
- A temporary pause in gold purchases by households fearing import duty normalisation.
- Increase in unofficial gold imports given higher domestic gold prices relative to global prices.
If the latter, India’s taxation structure on gold would require a relook, the brokerage said.While lower gold imports are a positive for India’s CAD and BoP, it may have “hidden” negatives, as per Kotak. It remains to be seen if lower gold imports represent:
- A ‘permanent’ reset to lower household demand.
- A temporary pause in gold purchase by households.
- Diversion of gold imports to unofficial channels with its negative repercussions for government taxes, Kotak said.
As per Kotak, the sharp decline in gold imports can be good, bad or ugly. It further explained on each of these views:
Good
Kotak said the sharp decline is “good” if it is a “permanent” reset to lower household demand.
It said the sharp decline in monthly gold imports from May 2026 may reflect —
Higher import duties on gold ever since, which resulted in a 9% increase in domestic gold prices relative to global gold prices and / or stable global and domestic gold prices, which may have reduced the investment appeal of gold for households.
Kotak notes the sharp increase in inflows into gold ETFs on rising gold prices in the second half of the calendar year 2025 and the sharp drop in inflows into gold ETFs on declining gold prices since February 2026, as a good indicator of household behavior linked to trailing returns of an asset class.
Bad
The brokerage said the sharp decline in monthly gold imports from May 2026 is “bad” if it is a temporary pause in household demand as it will come back sharply.
It said the sharp decline may simply reflect a temporary slowdown in gold purchases by Indian households as they
- Digest the one-time increase in domestic gold prices from higher import duties.
- Fear cut in import gold duties that may result in a loss on recently-purchased gold.
Kotak said gold imports may recover to “normal” levels if the government was to cut import duties. It added that it has seen similar lulls and jumps post import duty rate changes in the past.
Ugly
Kotak said the sharp decline in monthly gold imports from May 2026 could be “ugly” if official gold imports understate actual gold imports meaningfully.
It said the sharp decline could also reflect diversion of gold imports to unofficial channels and gold purchases by households from the unorganized sector with no or low impact of higher gold import duties on household behavior.
In addition, the government may be losing significant revenues via lower customs and GST revenues on gold if a large amount of gold ‘import’ and ‘purchases’ were bypassing official channels.
The brokerage said it has long argued for higher GST rates and lower import duties on gold as an alternative route to:
- Reduce gold imports.
- Increase household gold recycling.
- Protect government revenues.
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