Akash Gupta | AI Generalist & Content Specialist, Sunshine Cargo Services, Kolkata, India — October 31, 2025

The silver market in India is undergoing a massive shift. High import duties made silver expensive, fueling smuggling and undercutting honest traders. The Indian government has now acted decisively to address this. 

It slashed the import duty on silver bullion from 15% to a competitive 6%. This dramatic cut makes raw silver cheaper for everyone. However, an unexpected restriction on plain silver jewellery imports—lasting until March 2026—creates a complex picture. 

This guide cuts through the noise. We explain the new customs rates, detail passenger rules, and forecast what these Directorate General of Foreign Trade (DGFT) and Central Board of Indirect Taxes and Customs (CBIC) changes mean for your investments.

Key Takeaways

• The customs duty on silver bullion has been drastically reduced from 15% to 6%, aiming to curb smuggling and lower input costs for domestic industry.

• Import of plain silver jewellery (HSN 7113) is now ‘Restricted’ until March 31, 2026, requiring a valid import license from the DGFT to prevent misuse of Free Trade Agreements (FTAs).

• Eligible international passengers can import up to 10 kg of silver by paying the lower 6% duty, while non-eligible passengers face a higher 36% rate.

Understanding India’s New Silver Import Duty Structure

The government’s primary goal was to bring legal silver imports back into the mainstream. The reduction in the Basic Customs Duty (BCD) is the cornerstone of this policy. This measure is intended to make legal imports competitive with smuggled goods.

In short: The total customs duty on silver bullion is now 6% (down from 15%). The duty on finished silver jewellery (HSN 7113) has also dropped to 20% (from 25%).

The new effective duty rate on silver bullion—bars, coins, and unwrought silver—is now 6%. This rate comprises the Basic Customs Duty plus the Agriculture Infrastructure and Development Cess (AIDC). This sharp cut from the previous 15% rate is significant. 

For finished silver jewellery and parts, the duty has been lowered from 25% to 20%. The government uses the duty on finished goods to offer some protection to local manufacturers. This dual approach tackles both raw material costs and finished-product market stability. 

The Union Finance Ministry approved these revised rates as part of its ongoing customs reform process.

Mini-Case Example: The Manufacturer’s Saving A major silver goods manufacturer, Sterling Silverware Pvt. Ltd., imports 100 kg of silver bullion. At the old rate of 15%, the duty on Rs. 80 lakh worth of silver was Rs. 12 lakh. 

At the new 6% rate, the duty is only Rs. 4.8 lakh. This Rs. 7.2 lakh saving per 100 kg directly lowers their production cost. This saving is expected to be passed on partially to consumers.

Why Were Silver Jewellery Imports Restricted Until March 2026?

The reduction in bullion duty was paired with a regulatory tightening on finished jewellery. The import policy for plain silver jewellery and unmounted silver has changed from ‘Free’ to ‘Restricted’. This change is critical for anyone importing jewellery. Importers now need a special license or authorisation from the DGFT.

In short: The restrictions prevent the misuse of Free Trade Agreements (FTAs), especially by stopping the import of raw silver disguised as finished, zero-duty jewellery from non-silver producing nations.

This restriction, effective until March 31, 2026, aims to stop a specific type of trade malpractice. The government found that some importers were exploiting zero-duty privileges under FTAs, like the one with ASEAN, to bring in silver. 

They imported bullion disguised as finished or semi-finished jewellery from non-silver producing countries, such as Thailand. This circumvention of the duty structure hurt domestic jewelers. The Indian Express quoted an official confirming the rationale.

“DGFT has notified fresh restrictions on the import of plain silver jewellery under Customs Tariff Heading (CTH) 7113. The move aims to curb misuse of FTAs and address large-scale imports of silver in the guise of finished jewellery,” said a source from the Ministry of Commerce. (Source: The Indian Express)

The new licensing requirement acts as a gatekeeper. It ensures that only genuine trade, particularly those operating under export-focused schemes like 100% Export Oriented Units (EOUs) or Special Economic Zone (SEZ) units, can continue their operations seamlessly.

How the Duty Cut Impacts Silver Prices and Market Liquidity

The duty cut is a strong deflationary signal for the domestic silver market. However, the jewellery import restrictions add an element of short-term volatility. This is a classic supply-side paradox.

In short: The 6% duty on bullion makes the raw material cheaper, which lowers production costs. However, the restriction on finished jewellery could create temporary shortages and maintain a price premium on those specific items.

Cheaper bullion directly reduces the input cost for manufacturers and coin makers. In the medium term, this should translate to a marginal drop in the retail price of silver bars, coins, and domestically-made jewellery. 

This reduction encourages legitimate imports. The government hopes this will significantly reduce the incentive for smuggling. Lowering the overall cost of silver is expected to increase market liquidity. More capital can flow into legal purchasing channels. 

This policy is particularly timely, aligning with the peak festive and wedding season demand in India. Consumers may see more competitive pricing on certain items.

Customs Rules for Passengers: How Much Silver Can You Bring to India?

Many Non-Resident Indians (NRIs) and tourists seek to bring silver into India. The rules for arriving passengers are often different from commercial imports, but they are still strictly governed by customs regulations.

In short: Eligible passengers can import up to 10 kg of silver after paying the reduced 6% customs duty, but there is no duty-free allowance for silver.

Unlike gold, there is no duty-free allowance for silver in any form for personal use. However, passengers can import up to 10 kilograms (kg) of silver. The duty they pay depends on their eligibility status:

• Eligible Passengers: This includes persons of Indian origin or those holding a valid passport who have stayed abroad for at least six months. They pay a concessional duty of 6% (which is the same as the new commercial duty).

• Non-Eligible Passengers: All other travelers are subject to a much higher duty rate of 36%.

The duty is calculated on the ‘tariff value’ of the silver. This value is determined by Indian Customs and is subject to regular official notifications. It is mandatory for all silver to be declared at the customs counter. Failure to declare can result in seizure under the Customs Act, 1962.

Impact on Silver-Backed Loans and NBFC Valuations

Silver is a popular collateral asset, particularly in rural and semi-urban India. The new duty structure has both positive and ambiguous impacts on the silver-backed loan market, mainly managed by Non-Banking Financial Companies (NBFCs).

In short: The cheaper imported bullion is a positive for general market liquidity. However, the restrictions on finished silver jewellery imports may complicate collateral valuation in the short term, as price volatility could affect the loan-to-value (LTV) ratio.

For lenders, cheaper bullion is a net positive. It increases the overall availability of the metal. This enhanced supply can improve liquidity and stabilize the collateral base in the long run.

The immediate ambiguity lies with the valuation of silver jewellery collateral. The import restriction on HSN 7113 goods could potentially limit the supply of specific types of jewellery. 

A supply crunch can artificially inflate the market price premium on certain finished items. If the collateral is valued at a potentially inflated retail price, the NBFC’s actual realisable value might be at risk if the premium collapses post-2026. 

Therefore, major lenders will likely tighten their Loan-to-Value (LTV) ratios on jewellery or apply a more conservative haircut on valuation until the market adjusts post-restriction. This is a key risk factor for institutions like Muthoot Finance or Manappuram Finance that deal with precious metal loans.

Case Study: The ‘Thailand Route’ and FTA Misuse

The DGFT’s decision to restrict the import of plain silver jewellery (HSN 7113) was a direct response to a glaring loophole in India’s Free Trade Agreements (FTAs).

A sharp surge in imports of unstudded silver jewellery was noted in the fiscal quarter of April-June 2025. 

A significant portion of this surge originated from countries like Thailand. Under the ASEAN-India Trade in Goods Agreement (AITIGA), certain products from ASEAN countries can enter India at zero or concessional duty.

Officials discovered that raw silver bullion was being slightly worked upon—often just melted and minimally shaped—and then imported into India as ‘finished’ or ‘unstudded’ silver jewellery. This allowed the importers to pay zero import duty under the FTA. 

Thailand, a major source of this surge, is not a primary silver-producing nation. This fact strongly suggested that third-party silver was being transshipped or misdeclared to circumvent India’s high customs duty.

This practice had two negative effects:

1. Revenue Loss: The government lost billions in customs revenue.

2. Harm to Domestic Industry: Domestic jewellery manufacturers, who paid the full duty on their raw bullion before the 6% cut, were being severely undercut by the zero-duty ‘finished’ imports.

The DGFT’s subsequent move to place these items under the ‘Restricted’ list, requiring a license, successfully closed this loophole. This action provides a level playing field. It protects the livelihoods of small and medium domestic jewelers who rely on fair market practices.

Common Mistakes Importers Make with New Silver Rules

• Mistake: Assuming the duty cut applies to all silver equally.

  • Quick Fix: Distinguish clearly: Bullion is 6%. Finished/plain jewellery (HSN 7113) requires a license and pays 20% duty. The 6% cut applies mainly to raw material bullion.

• Mistake: Believing the jewellery restriction is permanent.

  • Quick Fix: The restriction is a temporary measure, explicitly listed to expire on March 31, 2026. Monitor official DGFT notifications for updates on its removal or extension.

• Mistake: Ignoring the ‘Eligible Passenger’ criteria.

  • Quick Fix: If you are an NRI or foreign passport holder, ensure you meet the ‘stayed abroad for at least six months’ rule to qualify for the lower 6% passenger duty. Otherwise, you pay 36%.

• Mistake: Failing to declare silver upon arrival.

  • Quick Fix: Always declare the full quantity of silver. Even if the duty is lower, undeclared precious metal is a serious offence that can lead to seizure and heavy penalties under the Customs Act.

FAQs: Silver Import Duty India

Q1: What is the current silver import duty rate in India? 

Snippet: The current effective import duty on silver bullion (bars, coins) in India is 6%, which combines the Basic Customs Duty and the Agriculture Infrastructure and Development Cess, reduced from the previous rate of 15%.

Comprehensive Answer: The Government of India, through the Central Board of Indirect Taxes and Customs (CBIC), has revised the duty structure for silver imports. The total duty on unwrought silver, bars, and coins is now 6%. 

This reduction was implemented to curb smuggling and ensure an adequate supply of raw material for the domestic jewellery and industrial sectors. For finished silver jewellery (HSN 7113), the duty has also been reduced from 25% to 20%.

Q2: Why are silver jewellery imports restricted until March 2026? 

Snippet: Imports of plain silver jewellery are restricted until March 31, 2026, to prevent the misuse of Free Trade Agreements (FTAs), where importers were allegedly declaring raw silver as finished jewellery from non-silver producing countries to avoid paying customs duty.

Comprehensive Answer: The restriction, imposed by the DGFT, is a temporary policy measure to address a surge in imports of plain silver jewellery, primarily observed from FTA partner countries like Thailand. 

The authorities found that the ‘rule of origin’ was being circumvented, with raw silver being imported as finished jewellery to claim zero or concessional duty. This illegal practice hurt domestic manufacturers. 

The ‘Restricted’ status means that commercial importers must now obtain a valid license from the DGFT to bring in silver jewellery, ensuring a more regulated and fair market environment.

Q3: How much silver can a passenger bring into India, and what is the duty? 

Snippet: A passenger can legally import up to 10 kg of silver upon payment of duty; there is no duty-free allowance, and the applicable rate is 6% for eligible passengers and 36% for non-eligible passengers.

Comprehensive Answer: Passengers arriving in India are allowed to import a maximum of 10 kg of silver in any form. However, unlike gold, there is no duty-free limit for silver. The duty is mandatory. 

An ‘eligible passenger’—an Indian-origin person or valid passport holder who has resided abroad for six months—pays the lower 6% duty. All others must pay 36%. The duty is paid on the tariff value of the silver, which customs officers notify daily. All imported silver must be declared to the customs authorities.

Q4: Will the silver import duty cut immediately lower silver prices in India? 

Snippet: The duty cut will lower the cost of imported silver bullion for traders, which should reduce prices in the medium term, but the prices may remain volatile in the short term due to finished jewellery import restrictions creating a potential supply crunch.

Comprehensive Answer: The immediate impact of the 6% duty on bullion is positive for price control as it reduces the input cost for the manufacturing industry. This is a crucial step towards reducing the current price premium on silver in India. 

However, the market reaction is complex. The concurrent restriction on finished silver jewellery imports could offset the deflationary pressure. 

If the demand for finished jewellery outstrips the capacity of domestic manufacturers during the festive season, the price of finished goods could see temporary upward pressure or volatility until the import situation normalises in 2026.

Q5: What is the HSN code for silver jewellery imports, and what is its policy status? 

Snippet: The HSN code for silver jewellery and parts is 7113, and its import policy status is currently ‘Restricted’ until March 31, 2026, meaning a government-issued license is required for its commercial import.

Comprehensive Answer: The Harmonized System of Nomenclature (HSN) code 7113 covers articles of jewellery and parts thereof, of precious metal or metal clad with precious metal. 

Specifically, the restriction covers codes like 71131141 (Unstudded Other Jewellery) and 71131149 (Other Jewellery), which are now classified as ‘Restricted’ by the DGFT. 

This restriction necessitates an importer to apply for and obtain a valid import authorisation, thereby enabling the government to monitor and control the inflow of these specific items and ensure compliance with trade agreements.

Conclusion: Navigating the New Normal in India’s Silver Market

India’s new silver import policy is a masterful balancing act. It champions domestic industry and fair trade while simultaneously lowering the cost of raw material. 

The substantial reduction in bullion duty to 6% is a huge win for manufacturers, investors, and consumers in the long run. However, the temporary but firm restrictions on plain jewellery imports signal the government’s zero-tolerance policy towards trade agreement misuse. 

The market will see short-term volatility, but the overall shift towards regulated, lower-cost imports is fundamentally positive for the silver economy.

Sources & Backlinks 

1. Silver imports in India: New customs duty rates, jewelry restrictions, and passenger rules explained — The Economic Times — October 28, 2025 —

2. Govt restricts imports of certain silver jewellery to curb “misuse” of FTAs — The Indian Express — September 25, 2025 —

3. India Restricts Import of Silver Jewellery Until 31st March 2026 — TaxGuru (DGFT Notification) — September 24, 2025 —

4. Silver duty cut to 6% may cool prices, boost trade; jewellery import curbs stay in place — Business Today — October 28, 2025 —

5. Silver Supply Crunch Hits India Amid Soaring Global Demand — Elite Wealth Ltd — October 16, 2025 —