Silver Import Rules Tightened: India Closes Duty Loophole
India restricts silver imports to curb duty avoidance via UAE trade deal.
Top Summary
- What happened: India moved silver imports from "free" to "restricted" category.
- Why it matters: Prevents traders from exploiting duty gaps created after gold and silver import tax hikes.
- What changes for people: Importers now require a government license to bring silver into India.
- Who is affected: Silver importers, except 100% EOUs, SEZs, and firms under export promotion schemes.
India Restricts Silver Imports
The Indian government has tightened regulations on silver imports to prevent traders from exploiting a duty gap following increased taxes on precious metals.
The move aims to close a loophole that allowed silver to be imported through Dubai under the India-UAE free trade agreement at lower duty rates.
New Rules for Silver Imports
On May 16, the Directorate General of Foreign Trade (DGFT) issued Notification No. 17/2026-27, changing silver's import status from "free" to "restricted."
This means importers now need a government license to import silver, including silver alloys mixed with gold and platinum.
Background: Import Duty Hike
On May 12, the government raised the import duty on gold and silver from 6% to 15%.
Additionally, bullion imports face a 3% Integrated Goods and Services Tax (IGST).
The UAE Trade Agreement Loophole
The India-UAE Comprehensive Economic Partnership Agreement (CEPA), effective from May 1, 2022, gradually reduces tariffs on silver imports from the UAE from 10% to zero over ten years, concluding in 2031.
Currently, the concessional tariff on silver from the UAE is 7%.
Global Trade Research Initiative (GTRI) highlighted that the duty hike created an eight percentage point gap, incentivizing traders to reroute silver shipments through Dubai.
"Officials fear the widening tariff gap could trigger large-scale arbitrage-driven imports from the UAE.The new licensing requirement is expected to give the government tighter control over the quantity and timing of silver imports while still allowing duty-free imports for export-oriented industries." - GTRI report
Exemptions for Export Industries
The restrictions do not apply to 100% Export Oriented Units (EOUs), Special Economic Zones (SEZs), or firms importing silver under export promotion schemes like Advance Authorisation.
These exporters can continue to access silver for manufacturing export products like jewellery.
Gold Imports and Economic Impact
Gold has not been moved to the restricted category because the duty advantage through the UAE is much smaller, around 1% under a tariff-rate quota system.
India’s silver imports crossed $12 billion in fiscal year 2026, a 150% jump from the previous year.
Gold imports also rose over 24% to a record $71.98 billion in 2025-26.
The government aims to cut non-essential imports and reduce pressure on foreign exchange reserves amid high crude oil prices and global geopolitical tensions.
What to Watch Next
The market will be closely watching the government's licensing process for silver imports and its impact on trade volumes. Further adjustments to import policies related to gold and other precious metals could also be on the horizon depending on global economic conditions.