India Imposes Silver Import Curbs as Rupee Hits Record Low

India has imposed restrictions on silver imports, Bloomberg reported on 16 May 2026. The directive from the Directorate General of Foreign Trade is part of a series of measures to preserve foreign-exchange reserves and defend the rupee, which recently sank to an all-time low. Silver imports have surged in recent months, contributing to a widening trade deficit as India consumes nearly a quarter of global physical silver.

Context — why this matters now

The rupee breached the 84.50 per dollar level this week, a record low for the currency. Pressure stems from a strong dollar index, which traded above 107.50, and elevated global crude oil prices near $88 per barrel. India imports over 80% of its oil, creating persistent dollar demand. The immediate catalyst for the import curbs is a sharp 37% year-on-year increase in silver imports for April, which exacerbated outflows from the country's foreign-exchange reserves. Reserves currently stand at approximately $580 billion, down from a peak of over $642 billion in September 2021.

Historically, India has used import restrictions to manage currency stress. In July 2013, during the "taper tantrum," the government raised gold import duties to 10% and introduced an 80:20 rule for imports. Those measures helped stabilize the rupee after it fell more than 20% against the dollar in the preceding months. The current action on silver, rather than gold, suggests authorities are targeting a specific, high-growth leakage in the capital account.

Data — what the numbers show

India imported 2,200 metric tons of silver in the first four months of 2026, a 92% increase from the same period in 2025. The annual import bill for silver is projected to exceed $7 billion at current prices. In April alone, imports hit 735 metric tons, valued at roughly $670 million. The rupee has depreciated 4.2% against the dollar year-to-date, underperforming the MSCI Emerging Markets Currency Index, which is down 1.8%. The USD/INR pair traded at 84.63 on 16 May.

| Metric | Before Restriction (Apr 2026) | After Restriction (Projected) |

|---|---|---|

| Monthly Silver Import Volume | 735 metric tons | Estimated < 400 metric tons |

| Monthly Import Value | ~$670 million | Estimated ~$360 million |

India's goods trade deficit widened to $19.1 billion in April, with precious metals contributing $1.1 billion to that gap. By comparison, China imported 340 metric tons of silver in 2025.

Analysis — what it means for markets / sectors / tickers

Global silver prices, which traded near $29.20 per ounce, face immediate downward pressure. Reduced Indian demand, a primary physical market pillar, could weigh on prices. The iShares Silver Trust (SLV) and silver miners like Pan American Silver (PAAS) and Wheaton Precious Metals (WPM) may see outflows. Conversely, domestic Indian jewellers and silver fabricators like PC Jeweller and Titan Company may benefit from reduced input cost volatility, though they face potential supply bottlenecks.

A counter-argument is that silver's industrial demand, which accounts for over 50% of global consumption, may absorb the surplus. The solar panel and electronics sectors continue to grow, potentially cushioning the price impact. Market positioning data from the Commodity Futures Trading Commission shows money managers held a net long position of 45,000 contracts in COMEX silver futures, a bullish stance now at risk. Capital flow is likely shifting toward gold as a more stable alternative within the precious metals complex.

Outlook — what to watch next

The next catalyst is India's trade balance data for May, due 14 June 2026. A narrowing deficit will signal the curbs' effectiveness. The Reserve Bank of India's monetary policy meeting on 6 June will be scrutinized for further defense measures, including potential intervention in the non-deliverable forwards market. Watch the USD/INR pair for a sustained break above 85.00, a level that could trigger more aggressive capital controls.

Silver price support is at its 100-day moving average of $28.15 per ounce. A breach could target the $27.00 zone. The gold-silver ratio, currently at 78, will indicate if silver is underperforming its peer. Monitoring COMEX warehouse silver stocks will provide evidence of the physical market surplus.

Frequently Asked Questions

How will this affect silver prices for retail investors?

Retail investors in silver ETFs or physical bullion may see near-term price weakness. India's import restrictions remove a major source of physical demand. However, long-term price direction remains tied to industrial consumption in green technology. Retail holders should monitor inventory levels at major exchanges like the London Bullion Market Association for signs of oversupply.

What is the historical precedent for India restricting precious metal imports?

India last imposed major restrictions on gold imports in 2013 to defend the rupee. The government raised import duties and mandated that 20% of imported gold be exported. That policy succeeded in cutting the current account deficit from 4.8% of GDP to 1.7% within a year but also spurred a rise in smuggling. The 2026 silver curbs are a targeted version of that playbook.

Does this signal a broader shift in India's trade policy?

The silver move indicates a selective, sectoral approach to managing the trade deficit, prioritizing essential imports. It does not signal broad-based protectionism. The government is likely to avoid measures that impact critical industrial inputs or energy imports. The policy underscores a focus on non-essential, deficit-widening consumer goods, with luxury items being the most vulnerable to future restrictions.

Bottom Line

India's silver import curbs are a targeted defense of foreign reserves that will reshape global bullion flows and pressure prices.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.