Mumbai: India's currency has tumbled to record lows because of pressure on its external balance of payments, prompting steps to cool dollar outflows.
A surge in oil prices following the late-February Iran conflict and persistent foreign selling of Indian stocks are likely to widen India's balance of payments deficit in the current financial year. Economists at HSBC expect the deficit to widen to $65 billion in 2026-27 from an estimated $35 billion in 2025-26.
Also read: India tightens checks on overseas flows as currency pressure mounts, sources say
Below are steps India is taking to manage dollar outflows:
HIGHER DUTIES ON GOLD, SILVER
India raised import tariffs on gold and silver to 15% from 6% in May.
The government has imposed a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess (AIDC) on gold and silver imports, taking the effective import tax to 15% from 6%.
TIGHTER IMPORT RULES
India has also imposed tougher import rules on gold and silver.
It has tightened rules for duty-free gold imports for jewellery exports by capping imports at 100 kilograms per licence.
India this week, placed imports of silver bars with 99.9% purity and all other semi-manufactured forms of silver under the restricted category with immediate effect.
APPEAL TO CONSERVE FOREX
While India has not imposed restrictions on travel, Prime Minister Narendra Modi appealed to citizens to avoid unnecessary foreign travel.
He also urged people to work from home to conserve fuel and help the government to reduce costly oil imports.
STEPS TO CURB CURRENCY SPECULATION
In February and March, the Reserve Bank of India cut the limit for net open forex positions that banks can hold.
The step sought to rein in speculative positions in the rupee, which were exacerbating depreciation pressures.
