Gold imports in Nepal saw a sharp rise between mid-December 2024 and mid-January 2025, following a reduction in customs duty rates. The government had reduced the customs duty on gold imports from 20% to 10% in late December 2024, leading to a significant increase in imports.

According to the Department of Customs, Nepal imported 400 kg 101 grams of raw gold in the review month, compared to 185 kg 978 grams imported as of mid-December 2024 in the current fiscal year. In monetary terms, Rs 4.67 billion was spent on gold imports in mid-December 2024 to mid-January 2025 alone, compared to Rs 2.4 billion spent from mid-July to December 2024.

The surge in imports reflects the impact of the government’s decision to reduce customs duty. Earlier, through the budget for Fiscal Year 2024/25 (2081/82 BS), the government had increased the customs duty on gold imports from 5% to 20%. However, gold traders highlighted that the high customs duty, combined with rising gold prices, had made importing gold unviable.

The situation was exacerbated after India reduced its customs duty on gold from 15% to 6% in July 2024. This created a disparity, making gold more expensive in Nepal and increasing the risk of smuggling from India. Under pressure from the Federation of Nepal Gold and Silver Dealers Association, Finance Minister Bishnu Poudel eventually reduced the duty in December 2024.

The decline in formal imports during the higher customs duty period also affected government revenue. Banks, which are the only entities allowed to import gold in Nepal, had limited imports due to reduced market demand.

Mani Ratna Shakya, founding president of the Federation of Nepal Gold and Silver Dealers Association, noted that while formal imports were minimal before the duty reduction, illegal imports had surged. After the customs duty reduction, formal imports increased significantly, and traders began purchasing gold to settle long-pending accounts. Shakya also mentioned that during the period when banks restricted imports, traders relied on old stock to meet the demand.

Devratna Shakya, owner of Dev Corner Jewelers, explained that gold imports surged in Poush (mid-December to mid-January) to meet increased demand ahead of the marriage season in Magh (mid-January to mid-February). "Even though imports have increased, they still fall short of market demand," Shakya said.

The federation set the price of gold at Rs 160,600 per tola (11.66 grams) on Friday, up from Rs 159,600 on Thursday.