India's silver imports fell sharply to US$76 million in May from US$411 million in April, weeks after the government raised the import duty on silver from 6% to 15% and moved the metal to the 'restricted' category, requiring import licences, according to a report by the Global Trade Research Initiative (GTRI).
Duty Hike and Import Collapse
The steep 82% month-on-month drop in May imports follows the government's decision to curb excessive silver purchases, as reported by the Economic Times. The measures were introduced after silver imports surged 149.6% to a record US$12.05 billion in FY2025-26 from US$4.83 billion a year earlier, making silver one of India's fastest-growing import categories, the GTRI report noted.
| Metric | Value |
|---|---|
| Silver imports May | US$76 million |
| Silver imports April | US$411 million |
| Decline | 82% month-on-month |
| Import duty before hike | 6% |
| Import duty after hike | 15% |
| FY2025-26 total imports (record) | US$12.05 billion |
| FY2024-25 total imports | US$4.83 billion |
| Year-on-year growth | 149.6% |
Trade Policy Implications
The duty hike was intended to discourage excessive imports but also created an unintended consequence, according to the GTRI report. The increase widened the tariff advantage available to imports from the United Arab Emirates under the India-UAE free trade agreement, creating an 8 percentage-point differential that could have encouraged traders to route shipments through the UAE.
Contrast with Gold
The report noted that gold has not been subjected to similar restrictions because the tariff benefit available under the India-UAE trade agreement is much smaller—around 1% under a tariff-rate quota mechanism—reducing the scope for large-scale arbitrage.
Outlook for Importers
The immediate plunge in silver imports signals that the duty hike and licensing requirement have effectively curtailed inbound shipments. However, importers and customs brokers should remain vigilant about potential transshipment via the UAE to exploit the tariff differential, as flagged by GTRI. The policy shift underscores the government's willingness to use both tariff and non-tariff measures to rein in runaway import growth in strategic commodities.
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