Why India Suddenly Restricted Silver Imports Amid the Forex Crisis?

Key Takeaways

1. India has placed silver imports for domestic consumption under the “Restricted” category. Importers now need prior approval from DGFT. Customs duty on silver has also been raised from 6% to 15%.
    
2. Before this, silver imports were freely allowed under RBI norms. Silver imports had already surged 157% year-on-year in April 2026, reaching $411 million.

India’s Silver Clampdown: What Changed and Why it had to Happen?

India is dealing with a serious forex crisis. Forex reserves have dropped by $32 billion in just 10 weeks since the West Asia war began on February 28. Crude oil prices are above $100 a barrel, which makes India’s import bill heavier every week.

In this situation, spending precious dollars on silver was not sustainable. Silver imports surged 150% to $12.05 billion in 2025-26. 

In volume terms, the rise was 42%, reaching 7,334 tonnes. International silver prices also rose 74% during the year. The government had to act fast.

How This Hits Indians: Higher Prices, Tighter Supply

Jewellery and investment-grade silver will now cost more for common buyers. As of now, 1 kg of silver in India stands at ₹2.80 lakh. In May alone, prices have already surged by nearly 10%.

Jewellers who import silver for domestic sale will face the biggest pinch. However, exporters are protected. Imports for export-oriented units (EOUs) and Special Economic Zones (SEZs) remain exempt. 

India’s approximately $40 billion gems and jewellery export industry will not be hurt by this move.

What Experts Are Saying?

Jateen Trivedi, VP Research Analyst at LKP Securities, explained this clearly. “The silver import restriction doesn’t mean India has shut the door. It means the entry is now guarded. Supply isn't stopping, it's being channeled only through nominated agencies like RBI banks and DGFT-approved entities.”

On the bigger picture, Trivedi was direct. “While consumers will see higher domestic prices and wider spreads, the bigger play is about protecting the external account. Silver is just the instrument, forex is the driver.” 

Analysts suggest watching the MCX-LBMA spread as a key indicator of how much more Indians pay versus the global price. 

PM Modi had also publicly called on Indians to voluntarily reduce gold jewellery purchases for one year, framing it as national economic participation. 

Conclusion

India’s silver import curbs are a direct response to a real external sector crisis. The short-term pain of higher prices is the price of protecting the rupee. Exporters remain unaffected, keeping India's jewellery trade competitive globally. The government’s message is clear that essentials come first, while luxury consumption can wait.

FAQs 

Why does the Indian government ask people not to buy gold and silver during a forex crisis? 

The government is trying to reduce non-essential imports that increase pressure on India’s foreign exchange reserves. Silver imports alone jumped 150% to $12.05 billion in 2025-26, while oil prices crossed $100 per barrel. The government wants to save dollars, control the import bill, and protect the rupee by discouraging heavy gold and silver buying.

Can I travel within India with silver bars, jewellery, or large amounts of silver under the new silver restrictions?

Yes, silver can be legally carried into India as the recent regulations do not affect the possession of silver in the nation, but rather restrict its importation. There may be a need to show an invoice, GST bill, or proof of purchase for individuals transporting considerable amounts of silver bars, coins, and jewellery into the nation.