India has just made it more difficult to bring silver into the country. A May 16 notification from the Directorate General of Foreign Trade moved most silver products from “free” to “restricted”, meaning exporters now need government permission to bring bullion across the border.
The move came just days after the excise duty on precious metals jumped from 6% to 15%, effective May 13. Factor in the Integrated Goods and Services Tax, and the excise duty on imported silver now tops 18%. For a country that produced $12 billion in silver in the fiscal year ending March 2026, that’s no small feat.
Why did India hit the brakes
Silver imports rose 150% in value for FY 2025-2026, and volumes rose 42% over the same period. Rising global dollar prices combined with a depreciating rupee led to India spending more foreign currency on silver, widening the current account deficit.
The restrictions apply broadly, with limited exemptions only granted to Export Processing Zones and Special Economic Zones. The non-exempt entities cannot sell on the domestic market, so sellers of gems and bullion face a license.
Domestic silver prices responded predictably, jumping nearly 7% as new jobs took effect.
A classic playbook, and its horrors
The current silver restrictions represent a reversal of two years of deliberate price reductions. The preconceived notion was that limited duties would reduce smuggling networks and support the legitimate jewelry sector. The government seems to have decided that the calculus no longer works when import prices are rising by 150% a year.
The danger is that high barriers do not eliminate demand. When the import price exceeds 18%, the margin of the gray market sellers increases significantly. The smuggling networks that have recently cut prices to starve may be in business again.
What does this mean for the markets and money
In the global silver market, India’s import restrictions remove a major source of demand from the equation. India has become one of the largest buyers of silver in the world, with annual sales of $12 billion making it the market leader.
For Indian jewelers and bullion dealers, the immediate reaction is border pressure. A 7% increase in domestic prices not only means higher prices if consumers are more affluent, but also squeezes profits from all products.
