Silver Import in India Hits a Three-Year Low as Government Clamps Down on Inflows

New Delhi’s move to curb the trade deficit has sparked a supply crunch in the domestic market, sending premiums soaring despite robust retail demand.

The local bullion bazaar is currently witnessing a stark paradox: while consumer appetite for the white metal shows no signs of waning, the physical supply is drying up rapidly. Government data for May 2026 confirms that the silver import in India has plummeted by 87% on an annual basis, marking the sharpest contraction in three years. Where once importers brought in hundreds of millions of dollars worth of metal, the numbers have now shriveled to just $75.57 million, down from $566 million in the same month last year.

The decrease in volume is even more jarring than the value drop. Imports have nosedived by 94%, leaving the market with a mere 33 metric tons for the month. This isn't an accident of the market; it is a direct result of aggressive policy intervention. By shifting silver from the "free" to the "restricted" category, the government has made every shipment contingent on explicit approval from the Directorate General of Foreign Trade (DGFT).

Coupled with the regulatory hurdles, the fiscal burden has also intensified. The hike in import duty from 6% to 15% is the government’s chosen lever to protect foreign exchange reserves. Given that India consumes more silver than any other nation—relying on overseas markets for over 80% of its needs—these dual-pronged measures have effectively choked the primary supply pipeline.

Why it matters

The broader economic trend is clear: New Delhi is moving decisively to curb the runaway import bill that saw a record $12 billion worth of silver flow into the country during the 2025-26 fiscal year. While this protects the current account deficit, the domestic fallout is immediate. With physical supply restricted, premiums in the local market are rising as traders struggle to meet the steady demand from industrial players and retail investors who have flocked to silver ETFs and bullion as a hedge.

The implications for the coming months are significant. If this restrictive policy persists, the domestic scarcity of the metal will likely keep prices elevated regardless of global trends. For the vast jewellery manufacturing hubs and industrial sectors that rely on steady silver inputs, the coming months promise a period of volatility and supply-chain adjustments. The transition from a surplus-ready market to one constrained by red tape is not just a temporary blip; it marks a structural shift in how India sources its precious metals.