India has introduced stricter controls on silver imports in a significant policy move aimed at preventing traders from exploiting a newly created duty differential following the government’s recent increase in import taxes on precious metals. The decision comes amid concerns that lower-duty silver imports through the India-UAE trade agreement could become a route to bypass higher tariffs imposed on bullion imports.

To address this issue, the government has shifted certain categories of silver imports from the “Free” category to “Restricted,” meaning importers will now require government approval and licensing before bringing silver into India. The move forms part of broader efforts to regulate precious metal inflows, protect foreign exchange reserves, and plug potential trade loopholes.

According to a notification issued by the Directorate General of Foreign Trade (DGFT) on May 16 through Notification No. 17/2026–27, silver bars under HS codes 71069221 and 71069229, including 99.9% purity silver bars, have now been brought under the restricted category with immediate effect. The new regulation also applies to silver alloys containing gold and platinum.

The policy revision follows the government’s earlier decision on May 12 to increase import duties on gold and silver from 6% to 15%, in addition to a 3% Integrated Goods and Services Tax (IGST) on bullion imports.

The concern emerged due to provisions under the India-UAE Comprehensive Economic Partnership Agreement (CEPA), which came into effect on May 1, 2022. Under the agreement, India is gradually reducing tariffs on silver imports from the UAE from 10% to zero over a ten-year period ending in 2031. At present, silver imports from the UAE attract a concessional tariff of 7%.

Before the recent duty hike, India’s standard silver import duty stood at 6%, leaving minimal incentive for traders to reroute imports through Dubai. However, after the increase to 15%, the gap between the regular tariff and the UAE’s concessional rate widened to eight percentage points, creating a strong financial incentive for traders to channel global silver shipments through Dubai.

Industry think tank Global Trade Research Initiative (GTRI) highlighted that the wider tariff gap could potentially trigger large-scale arbitrage-driven imports from the UAE. The new licensing requirement is therefore expected to provide the government with greater control over the quantity and timing of silver imports, while reducing the possibility of duty circumvention.

The restrictions, however, will not apply to 100% Export Oriented Units (EOUs), Special Economic Zones (SEZs), or companies importing silver under export-promotion schemes such as Advance Authorisation for products including jewellery manufacturing. These exemptions ensure that export-focused industries continue to have access to silver for production requirements.

Unlike silver, gold imports have not been moved into the restricted category as the potential tariff advantage under the UAE agreement remains relatively small at around 1%, reducing concerns over large-scale arbitrage activity.

The move also comes amid a surge in precious metal imports. India’s silver imports crossed $12 billion in FY2026, recording a significant 150% increase over the previous year. Meanwhile, gold imports rose by over 24% to a record $71.98 billion in FY2025–26, despite shipment volumes declining 4.76% to 721.03 tonnes.

The sharp rise in imports has added to government concerns, with the latest measures designed to curb non-essential imports, maintain tighter oversight over precious metal inflows and reduce pressure on foreign exchange reserves amid rising crude oil prices and continuing global geopolitical uncertainties.