India clamps down on silver imports after $411 million April bill weakens rupee

India moved on Saturday to restrict the import of silver bars, shifting them from the “free” to the “restricted” category under its trade policy. The government issued the notification with immediate effect.

The Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce and Industry, amended the import policy for specific categories of silver under Chapter 71 of the Indian Trade Classification (ITC) Harmonised System (HS) 2022.

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Silver bars containing 99.9 per cent or more silver by weight (ITC HS Code 71069221) and “Bar Other” categories (ITC HS Code 71069229) were earlier freely importable subject to RBI regulations. They are now under ‘restricted’ category.

Only shipments licensed by India’s DGFT can now come into the country.

Commodities under the restricted category require a government-issued licence for imports. Importers must now comply with Policy Condition No. 7 of Chapter 71 of ITC (HS) 2022, Schedule-I with immediate effect.

Why the government acted

India’s silver imports jumped over twofold to $411.06 million in April. That sharp rise prompted the government to act.

The restriction is one of a number of measures taken to preserve foreign exchange reserves and defend the rupee after the currency sank to an all-time low.

The move comes at a time when gold and silver prices have remained volatile due to geopolitical tensions in West Asia, pushing investors globally towards safe-haven assets such as precious metals and the US dollar.

Duty hike came first

The government more than doubled import taxes on gold and silver to about 15 per cent from 6 per cent. imposing a 10 per cent basic customs duty alongside a 5 per cent agriculture infrastructure and development levy.

The DGFT notification on silver imports comes within a week of the government raising the duty on the precious metal.

Gold restrictions too

The silver curbs are part of a broader policy push on precious metals. The government also raised the import duty on gold and imposed restrictions on its imports this week.

India has been trying to discourage gold imports. In recent weeks, it had imposed a 3 per cent integrated goods and services tax on gold and silver imports. This prompted banks to halt purchases for more than a month.

Certain categories of silver imports have also been brought under Reserve Bank of India regulations. The policy changes are issued under the Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade Policy, 2023.