The Indian government’s decision to raise import duties on gold and silver to 15% triggered a sharp reaction in bullion markets, but according to Zerodha co-founder Nithin Kamath, what stood out most was not the policy move itself, but the absence of suspicious trading activity before the announcement.
In a detailed post on social media, Kamath pointed out that there were no unusual movements in open interest, prices or trading volumes in gold and silver contracts in the hours leading up to the late-night announcement. The observation, he suggested, reflected positively on Indian markets at a time when concerns around insider trading and privileged access to policy decisions have become increasingly common globally.
“The news about import duties on gold and silver going up to 15% came late last night. The interesting thing: neither open interest, prices, nor volume in Gold and Silver showed any unusual moves in the hours leading up to the announcement,” Kamath wrote in his post.
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The Indian government increased import duties on gold and silver to 15% to curb rising bullion imports, ease pressure on the current account deficit, and support the rupee.
According to Nithin Kamath, there were no unusual movements in open interest, prices, or trading volumes in gold and silver contracts in the hours leading up to the late-night announcement of the duty hike.
The import duty hike is expected to make gold costlier, potentially impacting jewellery demand. Consumers might opt for lighter-weight jewellery, and the industry fears a rise in smuggling and a grey market.
Yes, creating a 15% spread through the duty hike can lead to arbitrage opportunities, prompting people to attempt smuggling. However, the government is expected to be vigilant.
Investment demand for gold is expected to remain stable or even be encouraged by the price increase, as people tend to invest in assets that are rising. Gold ETFs are also not expected to be significantly impacted.
The Indian government increased the effective import duty on gold and silver to 15%, reversing some of the reductions announced in 2024. The move came amid concerns over rising bullion imports, pressure on the current account deficit and weakness in the rupee. The announcement immediately pushed domestic bullion prices sharply higher, with MCX gold and silver contracts witnessing strong gains after trading resumed.
However, Kamath argued that the absence of abnormal positioning before the announcement was significant because such policy-sensitive events in several Western markets often trigger allegations of selective information leaks and opportunistic trading by people close to power centres.
Kamath compares India’s market conduct with the US
Kamath said that if a similar policy decision had been taken in the United States, there would likely have been attempts by individuals with access to privileged information to profit from the development through futures markets, derivatives or even prediction market platforms.
“If this had happened in the United States, I’m fairly sure some of the people close to the decision-making process would have found a way to trade it, either through regulated futures markets, other derivative contracts, or prediction markets like Polymarket and Kalshi,” he said.
The Zerodha co-founder also referred to previous allegations and reports surrounding trading activity linked to crude oil and geopolitical conflicts, particularly during the Iran conflict, where questions were raised globally about whether politically connected participants benefited from advance information or policy-sensitive developments.
Without naming specific individuals or institutions, Kamath suggested that the monetisation of privileged information by influential circles had become increasingly normalised in some parts of the world. He argued that the line between legitimate market participation and insider trading was becoming blurred in many global financial systems.
Kamath further said that despite criticism around Indian markets on issues such as regulation, retail speculation and volatility, the country’s financial ecosystem appeared to remain more tightly supervised in these “grey zone” areas compared to many developed markets.
His comments also reignited a broader debate around prediction markets and alternative trading platforms, which have rapidly gained popularity globally over the last few years. Platforms such as Polymarket and Kalshi have increasingly become avenues where users speculate on political outcomes, policy shifts and geopolitical events, often raising questions around information asymmetry and regulatory oversight.
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