Silver Imports Plunge 87% as Government Imposes Stringent Curbs on India's Largest Consumer Status

Silver Imports Plunge 87% as Government Imposes Stringent Curbs on India's Largest Consumer Status​

India's silver imports crashed by a significant 87% in May when compared to the same month last year, reaching a three-year low. The dramatic drop follows government restrictions aimed at managing precious metal inflow into the country. Since India relies on overseas purchases for over 80% of its silver requirements, these import curbs are poised to influence global market sentiment.

Massive Drop in Silver Imports Amid Policy Tightening​

Government data from the Ministry of Commerce and Industry revealed that the value of silver imports fell to $75.57 million in May. This figure is a sharp contrast to the $566.22 million imported one year prior. In volume terms, there was an even steeper decline, with imports dropping 94% year-on-year to just 33 metric tons.

The sharp contraction occurs as the government has continually tightened its control over precious metal movement. Restrictions were immediately imposed in mid-May, and rules were further constrained earlier this month by adding silver grain and powder into a restricted category, requiring prior import authorization for these forms.

Government Steps Up Duty Hike to Curb Precious Metal Flow​

As part of broader efforts to reduce pressure on foreign exchange reserves amid elevated oil prices, the government has increased import duties on both gold and silver. The duty applicable to both metals has been raised to 15%, up from its previous rate of 6%.

These policy moves are designed to curb excessive precious metals imports. Meanwhile, India recorded a record spending figure in the financial year ending March. The country spent $12 billion on silver imports in FY 2025/26, significantly higher than the $4.8 billion spent in the previous year.

Investment Demand vs Consumption Pushing Market Dynamics​

While trade flows are tightening, market sentiment indicates rising local premiums and underlying demand pressures. A Mumbai-based dealer operating with a private bullion-importing bank noted that "There is demand, but imports have become difficult due to the restrictions, and local premiums have started to rise."

Silver holds diverse importance in India, used extensively in jewellery production, industrial applications, and as investment commodities. Demand has recently been driven more by investment buying rather than traditional consumption patterns. Inflows into silver ETFs have climbed to a record high over the past year.

India sources its silver predominantly from key global markets including the United Arab Emirates, Britain, and China.