India's Silver Imports Hit Three-Year Low Amid Strict Import Curbs

India's silver import volumes have plummeted to their lowest levels in over three years as the government implements aggressive measures to control precious metal inflows. Recent policy shifts, including heightened duties and strict licensing requirements, have fundamentally altered the landscape for bullion importers.

Massive Slump in Import Value and Volume

According to official data from the Ministry of Commerce and Industry, India's silver imports witnessed a staggering decline in May. The import value crashed by 87% year-on-year, falling to just $75.57 million compared to $566.22 million in May of the previous year.

The decline is even more pronounced when measured by volume. Silver imports dropped by 94% year-on-year, falling to a mere 33 metric tonnes. This represents the lowest import level recorded since February 2023. This sharp contraction follows a period of record-breaking spending, where India spent an unprecedented $12 billion on silver imports during the 2025-26 financial year, up from $4.8 billion the year prior.

Regulatory Tightening and Duty Hikes

The primary drivers behind this sudden contraction are a series of government interventions aimed at managing foreign exchange reserves and narrowing the trade deficit. In mid-May, the government restricted silver imports in nearly all forms with immediate effect. These rules were further tightened earlier this month by classifying silver grain and powder under the "restricted category," now requiring prior import authorization.

Furthermore, the government has significantly increased import duties on both gold and silver, raising them from 6% to 15%. These fiscal measures are part of a broader strategy to contain precious metal imports and ease the pressure on the Indian Rupee, especially in the context of elevated global crude oil prices.

Market Implications and Demand Dynamics

India remains the world's largest consumer of silver, relying on imports to meet more than 80% of its domestic demand. While silver is essential for jewellery, coins, and bars, it also plays a critical role in industrial applications such as electronics and solar energy.

Interestingly, recent demand has been driven more by investment vehicles, such as silver exchange-traded funds (ETFs), rather than traditional jewellery consumption. Industry insiders note that while demand remains present, the new regulatory hurdles have made procurement difficult, leading to a rise in local premiums. As India primarily sources its silver from the UAE, the UK, and China, these restrictions could potentially influence global silver price trends by reducing supply from one of the world's largest buyers.

Key Takeaways