Jewellers and silverware traders are reporting a drop in demand after the Centre doubled precious metal import duties to 15 percent and placed silver under the restricted import category even as industrial sectors see limited impact.

The back-to-back interventions followed Prime Minister Narendra Modi’s austerity appeal to citizens to cut down on unnecessary imports and defer purchases of precious metals by a year to conserve forex reserves amid rising energy costs.

“The government should look at restricting silver bullion trading and ban silver ETFs if they really want to ease the pressures on foreign exchange and reduce imports. The investment demand for the metal – often called the poor man’s gold – has outstripped jewellery demand,” All India Gem And Jewellery Domestic Council (GJC) chairman Rajesh Rokde said.

In the capital’s retail markets, sales executives at jewellery stores which specialise in silver ware and jewellery point to a slowdown in demand.

“Silver has given massive return on investment as prices have rallied sharply in the last few years, making it an attractive buy. This has also impacted jewellery demand as people prefer to buy coins or silver ware, which is more culturally relevant,” Rokde said.

The association is seeking time with the ministries of commerce and Industry as well finance to discuss measures that will support the industry and also help foreign exchange balance.

From solar energy, electronics to electric vehicles, industrial demand for silver has gone through the roof in recent years.

Electric vehicles use more silver than conventional internal combustion engine vehicles because they contain more electronics, high-voltage systems and advanced connectivity features.

But the industry is largely unfazed with the import restrictions.

“The impact of the silver import curbs will be limited. In EVs, the battery packs are being imported. Silver gets used in making connectors which are the contact points. In most cases, the contact points come to India in semi knocked down (SKD) state which then is assembled locally,” said Maxson Lewis, founder and chairman, Magenta Mobility.

The only part, which is manufactured in India is the battery connectors, Lewis said, adding “wherever silver is used as a connector item it is used in the processor and processing systems like circuit boards”.

Magenta is one of India’s several suppliers of EV chargers. It is also a manufacturer of good-carrying electric light commercial vehicles.

“These curbs are largely going to be for personal use of the metal as it is discretionary spending. The government will come to a point where they will realise that industrial import of silver needs to be continued to be allowed because otherwise this act will lead to direct impact on industries and that is not what is required right now,” said a senior executive from the auto component industry who did not wish to be named.

Original equipment manufacturers (OEMs) are expecting limited-to-no impact of the curbs on their business.

“Almost all the parts and components where silver is used is the manufacturing process is outsourced to our vendors. The key parts where silver, for instance, is used are imported into India as fully built products before adding them to the final component that OEMs receive. If this blanket curb on import of silver is not updated, it could discourage localisation of parts in India and push imports of fully built products,” said a senior executive from the product development department of a leading OEM.

India is the world’s biggest consumer of silver, which meets 80 percent of its demand through imports.

After hiking the duty to 15 percent from 6 percent, the government has also put imports of silver bars with 99.9 percent ⁠purity and all other semi-manufactured forms of silver under the restricted category. The two categories accounted for more than 90 percent of the silver imports ​last fiscal.

India spent a record $12 billion on silver imports in the Fy26, compared with $4.8 billion a year ​earlier, Reuters said. In April, ​silver imports jumped 157 percent ⁠from a year earlier to $411 million, the news agency cited trade ministry data as saying.

Courtesy : Moneycontrol