Trade Policy · Breaking
India shifts high-purity silver bars from “Free” to “Restricted” import status, requiring prior government authorisation — a sweeping move aimed at curbing a runaway import bill and shielding the rupee.
Background: A Surging Import Bill
India’s appetite for silver had been growing at a breathtaking pace. Over the fiscal year ending March 2026, silver imports surged by nearly 149 per cent, reaching a record high of approximately $12 billion — an extraordinary leap that alarmed policymakers and widened the country’s overall trade deficit. Against a backdrop of a weakening rupee, rising crude oil prices, and escalating geopolitical tensions in West Asia, the government moved swiftly to stem the tide.
The DGFT Notification: What Changed
On Saturday, May 16, 2026, the Directorate General of Foreign Trade (DGFT), operating under the Ministry of Commerce and Industry, issued a formal notification amending India’s import policy for select categories of silver under Chapter 71 of the Indian Trade Classification (ITC) Harmonised System (HS) 2022.
The key change: silver bars with 99.9 per cent or more purity by weight (ITC HS Code 71069221) and “Bar—Other” categories (ITC HS Code 71069229) have been reclassified from the “Free” import category to the “Restricted” category. Prior to this notification, these categories could be imported subject largely to standard Reserve Bank of India (RBI) compliance norms. The revised rules took effect immediately upon notification.
“The Import Policy of items covered under ITC HS Code 71069221 and 71069229 are revised from ‘Free’ to ‘Restricted’ subject to Policy Condition No. 7 of Chapter 71 of ITC (HS) 2022, Schedule-I (Import Policy) with immediate effect.” — DGFT Notification, May 16, 2026
What “Restricted” Means for Importers
The shift from “Free” to “Restricted” is significant. Importers who previously needed only to follow RBI norms must now secure a formal government licence or dedicated authorisation from the DGFT before executing any inbound shipment of the affected silver categories. This adds a layer of bureaucratic oversight and could substantially slow the pace of silver imports in the near term.
Additionally, all affected imports remain subject to existing RBI regulations, creating a dual-layer of financial oversight — one at the trade policy level and one at the monetary authority level.
Broader Policy Context: A Multi-Front Crackdown
The DGFT restriction on silver bars did not arrive in isolation. It is part of a coordinated series of measures by the Indian government to tighten control over precious metal imports.
- The standard customs duty on gold and silver was raised sharply from 6 per cent to 15 per cent on May 13, 2026 — one of the steepest duty hikes in recent years.
- The DGFT tightened norms governing duty-free gold imports under the Advance Authorisation (AA) scheme used by gems and jewellery exporters, including a 100-kg cap on gold imports under the scheme.
- Prime Minister Narendra Modi, in a national address on May 10, urged citizens to reduce reliance on gold and silver purchases in the interest of the national economy.
- Fifteen authorised banks have been permitted to import gold and silver under close regulatory supervision during the Akshaya Tritiya period.
Market Impact: Volatility and Premium Widening
Financial markets and commodity exchanges were put on alert. The Multi-Commodity Exchange (MCX), in particular, braced for a volatile opening session on May 18 as the domestic market priced in the sweeping policy changes. Analysts anticipated that domestic silver prices would diverge significantly from international benchmarks, with a widening premium reflecting restricted supply channels and elevated customs duties.
For the average investor, silver’s traditional role as an affordable alternative to gold has been fundamentally altered. The combination of import restrictions and duty hikes means retail buyers now face prices that carry a substantial domestic premium over true international values.
Impact on Industry and Trade
The restrictions cut across multiple industrial sectors. Silver is a critical raw material not only for the jewellery industry but also for electronics, solar panels, and precision components. The abrupt change in policy — without a transition period — has raised concerns among small and medium jewellers, particularly those stocking inventory ahead of the wedding season.
Industry stakeholders have called on the government to streamline and expedite the new licensing process to minimise supply disruptions to legitimate manufacturers and exporters. The gems and jewellery sector, which is a significant contributor to India’s export earnings, may face input cost pressures in the months ahead if the licensing process is not made sufficiently transparent and efficient.
Legal and Regulatory Basis
The DGFT notification has been issued under the provisions of the Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade Policy, 2023, providing it with a firm statutory foundation. The restriction falls squarely within the government’s recognised powers to regulate imports in the national economic interest.
Outlook
The move signals a clear policy intent: India will no longer passively absorb the costs of a precious metals import surge at a time of currency stress and global uncertainty. Whether through licensing curbs, duty hikes, or direct import caps, the government has demonstrated a willingness to deploy multiple levers simultaneously. Businesses and investors will need to recalibrate their strategies for the silver market accordingly — tracking both the DGFT licensing framework and RBI regulations closely in the months ahead.
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