There has been a sudden brake on the arrival of silver in India. The latest report of Global Trade Research Initiative (GTRI) shows that the country’s silver imports have fallen by about 81.6 percent in the month of May. While silver worth $411 million came from abroad in April, this figure came down to just $76 million in May. There are two big decisions of the Central Government behind this huge decline. First, increasing the import duty from 6% to 15%, second, putting silver in the restricted category.
Why did the government become strict?
The demand for silver in India was increasing rapidly for some time. If we look at the data for the financial year 2025-26, the import of silver took a huge jump of 149.6% and reached a historic level of $ 12.05 billion. Whereas just a year before this figure was only 4.83 billion dollars. The government had to take this strict step in order to control the huge outflow of foreign currency and this unusual increase in imports.
A big game was going on through Dubai
After the duty was increased, a new type of technical problem had emerged. Due to the Free Trade Agreement (FTA) between India and UAE, huge tax rebate was being given on importing silver from Dubai. There was a big difference of 8 percent between the 15% general duty on other countries and the duty on silver coming through UAE. As a result, traders started using the UAE route extensively to earn profits, which led to the fear of increased manipulation instead of reducing imports.
Break caused by return of license raj
To remove this shortcoming, the Directorate General of Foreign Trade (DGFT) immediately took charge. On May 16, an important notification was issued and the import of silver was put in the ‘restricted’ list. This simply means that now no businessman can import silver from abroad without a government license. The result of the double blow of heavy taxes and the requirement of license was that within just a month the foreign trade of silver shrank by four to five times.
Now the eyes of market experts are fixed on how many import licenses the government issues in the future. If traders wish, they can do business by paying full duty of 15% or under preferential rules from UAE, but this will not be possible without government approval. At the same time, it has also been made clear in the report that there is no such ban on gold. In fact, the tariff benefit available on gold under the UAE trade deal is very nominal, due to which there is not much scope left for traders to manipulate.
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