India Bans Most Silver Imports to Cut Spending and Ease Rupee Pressure

New Delhi. The Indian government has banned the import of most types of silver with immediate effect. According to an order issued by the government on Saturday, this step has been taken to reduce import expenditure and ease pressure on the Indian rupee. 

Under the new rules, 99.9 percent pure silver bars and other semi-finished silver items have been placed in the "restricted" category. These two categories accounted for more than 90 percent of India's total silver imports in the last financial year. 

After this decision, silver imports in India are expected to decrease and supply in the domestic market will tighten. Traders say this could increase the premium on silver in the local market. Chirag Thakar, CEO of Amrapali Group, a major silver importer in Gujarat, said, "Silver was being traded at a discount after the government increased the import duty, but now it may be traded at a premium within a few weeks." 

India meets more than 80 percent of its total silver consumption through imports. Therefore, analysts estimate that if India's demand decreases, the price of silver in the international market may also come under pressure. Earlier this week, the Indian government had increased the import duty on gold and silver from 6 percent to 15 percent. 

It is said that the government has taken such a step to reduce the pressure on foreign exchange reserves due to the increase in crude oil prices in the world market and to control the import of precious metals.