India's Silver Imports Crash to Three-Year Low Amid Strict New Curbs

India's silver import volumes have plummeted to their lowest levels in over three years following aggressive government intervention. A combination of tightened regulatory restrictions and significantly higher import duties has disrupted the flow of the precious metal into the country.

Sharp Decline in Import Value and Volume

Official data from the Ministry of Commerce and Industry reveals a staggering collapse in silver inflows during May. In terms of monetary value, silver imports crashed by 87% year-on-year, falling to just $75.57 million compared to $566.22 million in the same month last year.

The situation is even more pronounced when looking at physical volume. Silver imports dropped by 94% year-on-year to just 33 metric tonnes, marking the lowest volume recorded since February 2023. This sudden contraction comes after a period of massive spending; India had previously spent a record $12 billion on silver imports during the 2025-26 financial year, up from $4.8 billion the year prior.

Regulatory Crackdown and Duty Hikes

The primary drivers behind this slump are deliberate policy shifts aimed at managing India's trade deficit and preserving foreign exchange reserves. In mid-May, the Indian government imposed immediate restrictions on silver imports in nearly all forms. This was followed by even tighter rules earlier this month, which classified silver grain and powder under the "restricted" category, now requiring prior import authorization.

Alongside these administrative hurdles, the government has significantly increased the financial barrier to entry. Import duties on both gold and silver have been hiked from 6% to 15%. These measures are designed to curb the outflow of foreign exchange, especially as elevated crude oil prices continue to put pressure on the Indian economy and the rupee.

Impact on Markets and Industrial Demand

India is the world's largest consumer of silver, relying on imports to meet more than 80% of its domestic demand. While traditional uses like jewellery, coins, and bars remain relevant, silver is also a critical industrial component for the solar energy and electronics sectors. Recently, demand has been skewed toward investment vehicles, with record inflows seen in silver exchange-traded funds (ETFs).

Market participants suggest that while these curbs help narrow the trade deficit, they are creating localized supply issues. Dealers in Mumbai have noted that while demand remains present, the difficulty in securing imports has caused local premiums to rise. The reduction in Indian demand may also exert downward pressure on global silver prices.

Key Takeaways