The government on Saturday placed the import of silver bars with 99.9% purity and some semi-manufactured silver products under the “restricted” category with immediate effect. The move comes days after India raised import duties on gold and silver to 15% from 6% as authorities try to curb imports and reduce pressure on foreign exchange reserves.
India is the world’s largest consumer of silver and imports more than 80% of its silver requirement.
Analysts say the latest restrictions are unlikely to completely stop silver imports, but they could significantly reduce how the metal enters the country and increase domestic premiums.
“The ban on silver imports does not mean that India has closed the door, it means that access is now secure,” said Jatin Trivedi, vice-president, commodity and currency research analyst at LKP Securities.
According to Trivedi, silver imports will now be done primarily by jewelers working through designated agencies such as RBI-authorized banks, DGFT-approved institutions and bullion exchanges.
“For the domestic market, that almost always translates into a higher premium,” he said. That means Indian investors can pay more for physical silver compared to global benchmark prices.
Analysts said one of the key indicators to monitor going forward would be the MCX-LBMA spread, the difference between the domestic silver price on India’s multi-commodity exchange and the international London benchmark price.
“The MCX-LBMA spread is the number to watch, because that difference shows you exactly how much extra Indians are paying compared to the world price,” Trivedi said.
India imported a record $12 billion worth of silver during FY26, a sharp increase from $4.8 billion in the previous fiscal. Silver imports rose 157% year-on-year to $411 million in April alone, according to Commerce Ministry data.
Over the past year demand has shifted towards investment purchases rather than traditional jewelery and silverware consumption. Silver exchange-traded funds also saw record inflows as investors sought alternatives amid rising gold prices and broader market volatility.
“Silver was trading at a discount after the government hiked import duty, but it is likely to start trading at a premium next week,” Amrapali Group Gujarat chief executive Chirag Thakkar said earlier.
For retail investors, this could mean higher prices for silver coins, bars and jewelry, even if international spot silver prices do not rise sharply.
Trivedi said the impact on global silver prices could be limited as India, despite being a major consumer, does not set international benchmark prices.
“Internationally, the impact on spot silver should be muted. India is a big consumer but not a price setter for global benchmarks,” he said.
However, he noted that trade flows could shift regionally if import demand resumes through channels such as the UAE Comprehensive Economic Partnership Agreement tariff quota mechanism.
“What could change is the physical trade flow. If demand rebounds through channels like the UAE CEPA TRQ, you’ll see regional premiums adjust in Dubai or Hong Kong,” he said.
The restrictions could also affect domestic silver ETFs and listed refiners as investors increasingly turn to financial products when physical supplies become more difficult or more expensive.
“Listed refiners and ETF pricing in India will also reflect the tightness, as they become the easiest access points when physical supply stops,” Trivedi added. “Two policy moves in three days point to forex management,” he said, referring to both the increase in import duty and fresh restrictions.
India imports most of its silver from UAE, Britain and China. Apart from jewelery and investment products, silver is also widely used in industrial applications including solar panels, electronics and electrical equipment.
(Disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. These do not represent the views of Economic Times)
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