India Curbs Silver Imports As Domestic Supply Tightens

India’s move to restrict silver imports could tighten domestic supply and raise local premiums, even as global prices remain under pressure. The government has shifted imports of 99.9% purity silver bars and most semi-finished silver products to the restricted category with immediate effect, according to a notification issued over the weekend.

The development comes after silver prices saw a sharp correction on Friday. On the Multi Commodity Exchange (MCX), silver prices dropped nearly 4%, or ₹11,644, to ₹2,79,458 per kg. International spot silver prices also slipped 3.1% to $80.93 per ounce amid selling pressure in the bullion market.

On Monday, 18 May, MCX silver contracts for July 2026 delivery fell 2.1% to ₹2,66,243 per kg.

Why Has India Restricted Silver Imports?

India is the world’s largest consumer of silver and depends on imports for more than 80% of its requirement. The government’s latest step is aimed at reducing inflows and easing pressure on the rupee after a surge in precious metal imports over the past year.

Data showed India spent a record $12 billion on silver imports in FY26, sharply higher than $4.8 billion a year ago. In April alone, silver imports jumped 157% year-on-year to $411 million.

Industry participants believe the restrictions will tighten availability in the domestic market. Silver had been trading at a discount after higher import duties earlier this year, but premiums may now rise in the coming weeks as supply narrows.

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What Could Happen To Silver Prices Now?

Market experts said the restrictions do not amount to a complete ban. Imports will still be allowed through nominated agencies, approved banks and authorised entities. However, the controlled supply route is expected to push domestic prices higher.

Analysts said the gap between domestic and international silver prices could widen if supply tightens further. While India remains one of the biggest consumers of silver, the country does not directly influence global benchmark prices.

Demand in India may also soften in the near term following the restrictions. Over the last year, silver demand has been driven more by investment buying, including strong inflows into silver exchange-traded funds, rather than traditional jewellery and silverware purchases.

Silver prices may continue to see some volatility in the coming sessions. Traders expect buying support to emerge near ₹2,65,000 on MCX, while prices could struggle to move past the ₹2,84,000 mark. Many in the market are also watching whether local silver prices climb further as imports become tighter.

Sources:

Reuters

Mint