Silver imports fell to US$76 million in May from US$411 million in April, weeks after the government raised the import duty on silver from 6% to 15% and moved the metal to the “restricted” category, requiring import licences.
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The measures were introduced after silver imports surged 149.6% to a record US$12.05 billion in FY2025-26 from US$4.83 billion a year earlier, making silver one of India’s fastest-growing import categories, the report said.
According to GTRI, the duty hike was intended to discourage excessive imports but also created an unintended consequence. The increase widened the tariff advantage available to imports from the United Arab Emirates under the India-UAE free trade agreement, creating an 8 percentage-point differential that could have encouraged traders to route shipments through the UAE.
To plug this gap, the Directorate General of Foreign Trade (DGFT) on May 16 shifted silver imports to the restricted category, making licences mandatory for imports.
The combined impact of higher tariffs and quantitative controls appears to have had an immediate effect, with imports plunging by more than four-fifths in a single month.Going forward, import volumes are expected to depend largely on the licences issued by the DGFT. GTRI said imports may continue from the UAE under preferential tariff provisions or from other countries at the full 15% duty rate, subject to approvals.
The report noted that gold has not been subjected to similar restrictions because the tariff benefit available under the India-UAE trade agreement is much smaller—around 1% under a tariff-rate quota mechanism—reducing the scope for large-scale arbitrage.