India has long been one of the largest consumers of silver, especially in rural areas, where people prefer silver over gold for festivals and rituals. In 2023, the Silver Institute conducted the Silver Survey, which stated that India accounted for nearly 25% of the global silver demand.
However, with the recent changes in the silver import policy, the silver market has been severely impacted. The government has imposed silver import restrictions, including on silver jewellery (plain and unstudded). The Directorate General of Foreign Trade (DGFT) has amended the import of silver jewellery from “Free” to “Restricted” with immediate effect till 31st March 2026. This means that importers can no longer bring in silver jewellery. Instead, they need to have an import licence and get approval before placing the import orders from DGFT before bringing the specified silver jewellery to India.
The government took this action for several reasons. Misuse of Free Trade Agreements (FTAs) through mislabelling of imports has been a growing issue, and the government aims to protect the Indian jewellery market.
Adapting the new export policy needs strategic planning, the guide one can follow to be compliant and secure:
- Watch out for the DGFT notification carefully and identify which specified silver jewellery items are restricted.
- Apply for an import licence to the DGFT before placing the order, with proper documentation.
- Be transparent while importing, ensure that it comes from a known, verified source, to avoid disputes and delays.
- Fill the communication gap and maintain clear communication with authorities to ensure a hassle-free and clear process.
- Be prepared with inventories. Maintain a balanced stock, don’t overstock, and prevent shortages to avoid delays.
The restrictions carry a major impact on jewellery manufacturers, precious metal traders, and consumer goods companies. Let’s break down the impact.
- Jewellery Manufacturers: The demand for locally made products is likely to rise automatically when the competition for imported materials reduces. However, it will also have a negative impact, as now the license is required for importing jewellery parts, which leads to delays and paperwork.
- Precious Metal Traders: All silver jewellery imports will now require a license, which might delay the import; it can even lead to higher costs, and there is even a chance of licence rejections.
- Consumer Goods Companies: The restriction of jewellery can lead to increased prices as the limited imports will affect the supply cycle.
These import restrictions are expected to boost local manufacturing but may tighten supply and raise prices in the short term.
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