India has officially banned silver imports following the government's decision to restrict precious metals imports, marking a significant escalation from previous policy measures. The Directorate-General of Foreign Trade (DGFT) revised silver import policy from free to restricted with immediate effect, requiring valid government licenses for all imports. This policy change comes alongside the government's recent increase in import duty on precious metals from 6% to 15%, including a 10% basic customs duty and 5% Agriculture Infrastructure and Development Cess. The BREAKING NEWS announcement confirms that the government has now moved from considering a ban to implementing it officially. According to FinanceWithHarish, these restrictions reflect pressure on currency, rising trade imbalance, and fear of capital moving out of the system, with most people understanding the impact only after prices explode.
Silver ETFs are experiencing significant supply constraints following the government's May 16 decision to place silver bar imports under the 'restricted' category, creating immediate market disruptions. As reported by Mirae Asset Mutual Fund, silver ETF discounts have already narrowed dramatically from ₹11,840 per kg to ₹5,000 per kg between May 15-18, indicating tightening supply conditions. Since silver ETFs require LBMA-certified physical silver for every new unit issued, restrictions on imports could tighten availability if approvals are delayed. The MCX gold and silver prices surged 6-8% immediately after the announcement, reflecting the pass-through of higher import costs into domestic markets. According to The Hindu BusinessLine, silver ETFs are currently trading well below the indicative Net Asset Value (i-NAV) announced by MFs, with domestic silver prices at a discount of about $1.5-$2 per ounce.
Silver prices have shown immediate and substantial increases following the regulatory changes, with MCX gold and silver prices surging 6-8% after the announcement. According to Mirae Asset Mutual Fund, gold prices in India rose sharply from ₹1.52 lakh per 10 grams to ₹1.64 lakh per 10 grams on May 13, primarily because customs duty per kilogram jumped from ₹8.31 lakh to ₹20.78 lakh. Silver prices have dropped by over 35% since hitting a record high of over $121 per ounce on January 29, currently ruling at $77.70 per ounce. The precious metal has gained nearly 9% this year, slightly outperforming gold's 5.5% increase. As FinanceWithHarish notes, most people will understand the impact only after prices explode, suggesting the full market implications of the import restrictions may not be immediately apparent.
India's silver import crackdown has shifted investor focus to Hindustan Zinc as tighter rules, rising bullion demand and rupee weakness reshape domestic supply dynamics, according to Financial Express Online. The import restrictions represent a strategic shift toward domestic refining and reducing current account deficit pressure, as noted by Renisha Chainani, Head of Research at Augmont. As reported by The Hindu BusinessLine, India's silver imports had crossed $12 billion in fiscal year 2026, registering a 150% jump from the previous year. The government's conscious effort to redirect India's silver supply chain away from import dependence toward domestic refining aims to create a fundamentally different regulatory and supply landscape for market participants. India remains one of the world's largest consumers of precious metals, accounting for roughly 25-27% of global jewellery demand for gold and as much as 35-45% of global bars and coins demand for silver.
According to Mirae Asset Mutual Fund, the current measures are aimed at conserving foreign exchange reserves and supporting the rupee during a period of elevated crude oil prices and currency weakness. However, the fund house cautioned that the cumulative impact of supply restrictions, changing demand patterns and ETF flows remains difficult to predict. Drawing parallels with the 2013 gold import curbs including the '80:20 rule', the report warned that restrictive measures had previously led to domestic shortages, higher premiums and a rise in smuggling. During that period, domestic gold prices climbed from around ₹26,500 per 10 grams to ₹34,500 per 10 grams amid supply constraints. The report suggests that while lower Indian demand could eventually weigh on international prices, domestic supply shortages may initially push local prices higher through elevated premiums.
