Silver duty cut to 6% may cool prices, boost trade; jewellery import curbs stay in place

The Centre has reduced its silver import duty from 15% to 6% in 2025, making bullion imports significantly cheaper for traders, manufacturers, and investors. However, the government has extended restrictions on silver jewelry and unmounted silver imports until March 2026, in an effort to prevent misuse of trade routes and safeguard domestic jewelers. The move aims to balance affordability with fair competition and supply stability in the precious metals market.

The DGFT has issued a policy circular clarifying that recently introduced import restrictions on silver jewellery will not apply to 100 percent Export Oriented Units, Special Economic Zone units, or importers operating under Advance Authorisation and DFIA schemes. 

These entities may continue duty-free imports for export production under Foreign Trade Policy 2023 and SEZ Rules 2006, although sales into the Domestic Tariff Area remain prohibited. The clarification aims to prevent disruption to jewellery exporters who depend on imported silver components and to maintain India’s competitiveness in global markets. Authorities have cautioned that any misuse of the exemptions will invite strict enforcement action.

New customs duty rates

Under the revised duty structure, silver bullion now attracts a 6% import duty, down from 15%, while silver jewellery and parts (HSN 7113) face a 20% duty, reduced from 25%. The lower rate on bullion is expected to make raw silver more affordable for industrial and jewelry manufacturing use, while higher duties on finished jewelry protect local producers from underpriced imports.

Import restrictions and licencing

Despite the duty cut, the import of plain silver jewellery and unmounted silver remains restricted until March 31, 2026. Importers must obtain a government-issued license to bring in these items. The restrictions follow a surge in imports falsely declared under free trade agreements and are intended to protect Indian manufacturers and preserve employment in the jewelry sector.

However, the government has clarified that these restrictions will not apply to 100% Export Oriented Units (EOUs) and Special Economic Zone (SEZ) entities. Such units can continue importing silver jewelry without restrictions, as long as the goods are not sold in the Domestic Tariff Area (DTA).

Additionally, imports made under the Advance Authorisation and Duty-Free Import Authorisation (DFIA) schemes have been exempted from the curbs. These schemes permit duty-free import of raw materials used in producing export goods, ensuring India’s export-linked manufacturing remains unaffected. The clarification underscores the government’s intent to maintain export competitiveness while regulating overall imports to manage the trade balance and domestic supply.

Passenger rules updated

Passengers returning to India can import up to 10 kg of silver, but no duty-free allowance is permitted. Eligible passengers—those of Indian origin or holding a valid passport with at least six months’ stay abroad—can import silver by paying 6% duty, while non-eligible travelers face 36% duty. The tariff value, which determines the payable amount, is notified regularly by Indian Customs, and duties must be paid in convertible foreign currency.

Market impact

The duty cut is expected to make silver bullion cheaper, lowering input costs for jewelry manufacturers and traders. Consumers may benefit from slightly reduced silver jewelry prices, though temporary volatility is possible as restrictions constrain finished jewelry imports.

For lenders and NBFCs offering silver-backed loans, cheaper bullion could enhance liquidity but might also affect the valuation of jewelry collateral in the short term. Once imports normalise, smoother financing and better price discovery are expected in the silver market.

Outlook for buyers, businesses

Experts believe that the dual approach—lower import duties but tighter jewelry controls—will stabilise prices while supporting domestic value addition. The exemption for SEZs and EOUs ensures India’s silver export chain remains unaffected.

With festive and wedding demand up by 40–60% during Diwali, silver continues to shine as an affordable and auspicious alternative to gold. The latest policy changes are expected to support both consumers and manufacturers, keeping India’s silver ecosystem vibrant through 2026.