India Restricts Silver Imports After Doubling Customs Duty

Days after more than doubling the customs duty, govt on Saturday moved in to restrict the import of certain types of silver as part of its strategy to reduce surging shipments of bullion.

In a notification, the directorate general of foreign trade moved silver bars containing 99% or more of the metal as well as “other” silver bars into the “restricted category” against “free” earlier.

This means that imports will only be allowed after a licence is issued by the govt agency, a move that is typically used to stem the import of certain goods based on the requirements domestically.

Silver imports have been surging in recent months as prices have shot up in the global market, both as an investment instrument as well as its multiple use in the industrial sector.

Unlike gold, where the value of imports has increased even as the volume has reduced during the last financial year, silver imports shot up two-and-a-half times to $12.1 billion, while the volume jumped 42% to 7,335 tonne.

The trend continued in April as well with the latest commerce department data showing that the value of imports soared 2.6 times to $411 million.

The decision to impose curbs comes barely a week after PM Narendra Modi appealed to citizens to cut down on non-essential imports and defer gold purchases.

Earlier this week, govt jacked up import duty on gold and silver from 6% to 15%.

A senior govt official said that the move has been initiated primarily to monitor specific import lines.

Trade research body GTRI, however, said the trade agreement with UAE allowed a tariff advantage of eight percentage point since the concessional duty from the West Asian trading partner was currently pegged at 7%, in line with the Comprehensive Economic Partnership Agreement.

“The restrictions are aimed at preventing a potential surge in low-duty silver imports routed through the UAE under CEPA,” it said.