Silver imports restricted; licence now must for select categories

The Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce and Industry, imposed mandatory import licensing for select categories of sil...

What Happened

The Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce and Industry, imposed mandatory import licensing for select categories of silver with immediate effect on May 16–17, 2026.
Silver import was reclassified from "free" to "restricted" under India's import policy, meaning only DGFT-licensed importers can bring silver into the country.
The restrictions cover silver bars (bullion), silver plated with gold or platinum, unwrought silver, semi-manufactured silver, and silver in powdered form.
The stated rationale includes easing pressure on India's foreign exchange reserves, curbing speculative import surges, and providing a level playing field for domestic jewellery manufacturers and small and medium enterprises (SMEs).
The move follows an earlier restriction on plain silver jewellery imports (imposed September 2025, applicable until March 2026) to address import loopholes via preferential duty agreements, especially through Thailand under ASEAN FTA provisions.
India is a major consumer and importer of silver, which is used in jewellery, industrial applications (solar panels, electronics), and as an investment asset.

Static Topic Bridges

Import Licensing and the Foreign Trade (Development and Regulation) Act, 1992

India's foreign trade — both exports and imports — is regulated by the Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act). The DGFT, as the arm of the Ministry of Commerce and Industry, administers the Foreign Trade Policy (FTP) under this Act and issues import/export authorisations.

Under FTP 2023 (notified March 31, 2023), imported goods fall into four categories: (i) Free — no licence needed; (ii) Restricted — import allowed only with DGFT authorisation; (iii) State Trading Enterprises (STE) — import permitted only through designated STEs (e.g., MMTC for gold); (iv) Prohibited — import not allowed at all.
An import authorisation (licence) under the restricted category is typically valid for 18 months and may be revalidated for six months.
The Exim Facilitation Committee (EFC) within DGFT processes authorisation applications for restricted items.
The DGFT can issue notifications modifying the import policy condition for any item at any time in the public interest.

Connection to this news: By reclassifying silver from "free" to "restricted," the government exercises the standard FTDR Act/FTP mechanism to administratively control imports without imposing a tariff — a non-tariff barrier (NTB) in WTO parlance.

India's Precious Metals Import Framework: Silver vs. Gold

India is structurally import-dependent for both gold and silver. Gold imports run at approximately $40–50 billion annually and are a major contributor to the Current Account Deficit (CAD). Silver imports have surged in recent years, partly driven by demand from solar panel manufacturing (silver paste in photovoltaic cells) and partly from investor interest as a gold hedge.

Customs duty on silver bullion: 6% Basic Customs Duty (BCD) + applicable surcharges (post the 2024 Budget reduction from 15% to 6% for silver).
Gold imports are partially managed through the State Trading Enterprise route: MMTC (Metals and Minerals Trading Corporation) and designated banks/agencies hold STE licences.
Silver does not have an STE mechanism historically; the new licensing requirement applies a similar control.
Under-invoicing and mis-declaration (e.g., importing silver jewellery under FTA preferential duty concessions to avoid BCD on silver bullion) have been documented as import compliance issues.

Connection to this news: The licensing requirement closes a regulatory gap where silver could enter freely even as its imports were straining the Current Account and forex reserves.

Current Account, Forex Reserves, and Import Management

India's Current Account Deficit is sensitive to commodity import surges. The Reserve Bank of India (RBI) manages foreign exchange reserves under the Foreign Exchange Management Act, 1999 (FEMA). Import restrictions are one instrument available to governments to manage the external sector — distinct from, but complementary to, exchange rate management and monetary policy.

FEMA 1999 replaced the Foreign Exchange Regulation Act (FERA), 1973; it decriminalised most foreign exchange violations and adopted a "management" rather than "regulation" approach.
India's foreign exchange reserves as of early 2026 were approximately $620–640 billion (the exact level fluctuates).
Precious metals (gold + silver) together constitute a structurally significant share of India's merchandise import bill.
WTO rules (under GATT Article XI) generally prohibit quantitative import restrictions, but permit temporary restrictions for balance of payments reasons (under GATT Article XII / WTO BOP Committee rules) or for other public policy grounds.

Connection to this news: The silver licensing policy is positioned as a forex-conservation measure, reflecting the government's broader concern about managing import demand in a globally uncertain environment.

ASEAN FTA and Rules of Origin Issues

The ASEAN-India Free Trade Agreement in Goods (AIFTA), in force since January 2010, offers preferential import duties on goods originating in ASEAN member countries. Circumvention occurs when goods from outside ASEAN are processed minimally in an ASEAN country to qualify for preferential origin, then exported to India at reduced duty rates.

Plain silver jewellery imported from Thailand was identified as a key circumvention route: silver bullion was imported into Thailand (lower duty destination), converted minimally into jewellery, and exported to India under the AIFTA concessional rate, effectively bypassing India's standard silver BCD.
Rules of Origin (RoO) specify the conditions under which a product qualifies for FTA preferential treatment; India has been pushing ASEAN for stricter RoO in the AIFTA review negotiations.
DGFT can impose country-specific or product-specific import conditions to address dumping, circumvention, or balance of payments concerns.

Connection to this news: The earlier September 2025 jewellery restriction and the current broader silver import licensing are linked responses to the same structural problem of FTA circumvention and import surge management.

Key Facts & Data

Import category change: Silver reclassified from "Free" to "Restricted" under FTP 2023
Administering authority: DGFT (Directorate General of Foreign Trade), Ministry of Commerce and Industry
Statutory basis: Foreign Trade (Development and Regulation) Act, 1992
Current Foreign Trade Policy: FTP 2023 (notified March 31, 2023)
Products covered: Silver bars, silver plated with gold/platinum, unwrought silver, semi-manufactured silver, silver powder
Import licence validity: 18 months (revalidable for 6 months)
Silver customs duty: 6% BCD (post 2024 Budget; earlier 15%)
ASEAN-India FTA (AIFTA): in force since January 2010
FEMA enacted: 1999 (replaced FERA 1973)
WTO rule on import restrictions: GATT Article XI (general prohibition); Article XII (BOP exception)
Prior restriction: Plain silver jewellery import restricted from September 2025 to March 2026 (Thailand loophole)