Part 2: India’s Silver Crackdown – Licenses Now Required After LBMA Exit & 15% Duty Hike – Is 1968 Repeating? Is Silver Stacking Threatened?

India Is Rapidly Tightening Control Over Gold & Silver

Just days after Part 1, India escalated again — this time going straight after silver.

On May 16, 2026, the Directorate General of Foreign Trade (DGFT) moved imports of 99.9% purity silver bars and several semi-manufactured forms from the “free” category to the “restricted” category.

Importers now need government licenses and approval to bring silver into the country. If you missed Part 1 covering India dropping the LBMA benchmark and Modi’s public appeal discouraging gold buying, read it here first: Part 1: India Drops LBMA Gold Benchmark – Is 1968 Repeating?

Updated Timeline of India’s Escalating Precious Metals Controls

Date	Action	Details
April 1, 2026	Dropped the LBMA Benchmark for Gold & Silver.	Switched to domestic MCX spot prices for ETFs & mutual funds.
April – Early May, 2026	Major "Paperwork/ Administrative" Delay.	Banks halted most imports for over a month.
May 11, 2026	Modi Urges “Don’t Buy Gold for 1 Year.”	Public appeal to reduce discretionary purchases.
May 13, 2026	Import Duty Hiked to 15%.	From 6% on gold and silver.
May 14, 2026	Strict New Compliance Rules on Gold Imports.	100kg cap per authorization, mandatory facility inspections, 50% export obligation, fortnightly reports, etc.
May 16, 2026	Silver Imports Restricted.	99.9% silver bars and semi-manufactured forms now require government license.

1. How This Time Is Different (and More Intense) Than 1968

In 1968, the government’s notorious Gold Control Act focused almost entirely on gold. Silver was largely left alone.

This time, India is hitting both metals at once:

• Dropping the LBMA benchmark.

• Raising import duties to 15%.

• Now requiring licenses for silver imports.

  
  

This is broader and more aggressive than what happened in 1968. The government is no longer just targeting the traditional store-of-value metal (gold) — they’re also going after silver, which has become a critical industrial metal tied to solar, electronics, EVs, military systems, and modern grid infrastructure.

2. Why Silver Was Targeted

India imported a record $12 billion worth of silver in FY26 — a massive ~150% jump from the previous year. A big chunk of this surge came from solar manufacturers front-loading purchases before policy changes. Large precious-metals imports can pressure India’s trade balance and foreign exchange reserves during periods of elevated demand.

Policymakers appear increasingly concerned about surging silver imports and related dollar outflows.

3. What This Means for Silver & Gold Stacking

Short-term: Domestic silver supply in India will tighten. Silver markets are significantly smaller and thinner than gold markets, meaning supply disruptions can create disproportionately larger price swings. Expect higher local premiums and potential upward pressure on physical silver prices inside the country. The current premium between MCX spot silver & COMEX spot silver is more than $12, while the gap between COMEX and SHFE is only around $10.

Long-term: Bullish for physical silver holders worldwide. Government attempts to restrict supply rarely kill demand in India — they usually increase black-market activity, smuggling, and make physical metal more desirable. Silver’s dual role (monetary + industrial) gives it extra strength in this environment.

This is one of the main reasons I remain significantly more bullish on silver long-term than gold.

Another factor may be pressure on India’s currency and foreign exchange reserves. The Indian rupee recently fell to record lows against the U.S. dollar amid rising oil prices and broader pressure on external balances.

Large flows into imported gold and silver can increase dollar outflows while pulling savings away from domestic financial assets and the banking system.

From a policymaker’s perspective, encouraging more capital to remain inside the domestic financial system is often viewed as preferable during periods of currency pressure and elevated imports.

4. Bottom Line – Part 2

India is no longer just discouraging gold buying. They are now actively tightening controls on both gold and silver at the same time. From dropping the LBMA benchmark, to hiking duties to 15%, to now requiring licenses for silver imports — the message is clear: India wants to reduce precious metals-related dollar outflows and gain tighter oversight over precious-metals flows entering the country.

History shows these kinds of interventions often fail to eliminate demand. Instead, they reinforce why holding real, physical metal outside the banking system is so important.

Crustacean Nation 🦀 Do you think India’s silver restrictions will push prices higher or just create more black-market activity? Are these escalating moves making you stack more physical silver right now?

Drop your thoughts below, I read every one!

Stay consistent. Stay stacked.

— International Stacker

Not financial advice. Just one stacker connecting the dots.

Sources & Further Reading (for transparency)

• SEBI Circular on Valuation Norms (February 26, 2026) – Official shift from LBMA to domestic MCX spot prices effective April 1, 2026. Reuters Coverage

• India Raises Gold & Silver Import Duty to 15% (May 13, 2026) Reuters | Bloomberg

• DGFT Notification – Silver Imports Moved to Restricted Category (May 16, 2026) – 99.9% purity bars and semi-manufactured forms now require government licenses.

• New DGFT Compliance Rules on Gold Imports (May 14, 2026) – 100kg cap per authorisation, mandatory facility inspections, 50% export obligation, fortnightly reporting, etc.

• Prime Minister Narendra Modi’s Public Appeal (May 10–11, 2026) – Urging citizens to reduce gold purchases for one year.

• Gold (Control) Act, 1968 – Historical context and failure of the law. Official records via India Code | Contemporary coverage from The Times of India and Economic Times archives.

• India Gold & Silver Import Data – Ministry of Commerce & Industry and Reserve Bank of India reports (FY 2025–26).

• Additional reporting from CNBC-TV18, The Hindu, Economic Times, Silver Institute, and World Gold Council data on Indian precious metals demand.

FAQ: India’s Gold & Silver Crackdown – What Stackers Need to Know (Part 1 & 2)

Why did India drop the LBMA benchmark on April 1, 2026?

On April 1, 2026, SEBI required gold and silver ETFs and mutual funds to switch from the London LBMA benchmark to domestic MCX spot prices. This gives India greater control over how its own precious metals are valued and reduces reliance on Western pricing systems.

Why is Modi telling Indians not to buy gold?

Prime Minister Narendra Modi urged citizens to reduce discretionary gold purchases (especially jewelry for weddings and festivals) for one year to protect foreign exchange reserves. High oil prices from the Iran conflict and strong precious metals imports are straining India’s current account and the rupee.

Is India repeating the 1968 Gold Control Act?

Not exactly, but the parallels are concerning. In 1968, the government imposed heavy restrictions on gold ownership, which created a massive black market and smuggling networks. The law ultimately failed and was repealed in 1990. This time, India is targeting both gold and silver with duties, licensing, and benchmark changes.

What changed with silver imports on May 16, 2026?

India moved 99.9% purity silver bars and several semi-manufactured forms from the “free” category to “restricted.” Importers now need government licenses and approval. This is a major escalation beyond gold-focused measures.

Will these restrictions actually reduce gold and silver demand in India?

History suggests they probably won’t work as intended. Gold and silver have deep cultural and religious importance in India. Past government attempts to discourage buying often just shifted demand to the black market or increased physical premiums.

Is this bullish or bearish for physical gold and silver stackers?

Long-term bullish. Government attempts to restrict supply rarely kill demand in India — they usually increase black-market activity and make physical metal more desirable. Silver especially benefits from its strong industrial demand (solar, electronics, EVs).

Why is silver being targeted alongside gold?

India imported a record ~$12 billion worth of silver in FY26. Silver is no longer just a monetary metal — it’s a critical industrial input for solar, electronics, and EVs. Policymakers appear concerned about surging imports and dollar outflows from both metals.

Should stackers buy more gold or silver because of India’s moves?

Many stackers see this as confirmation to keep stacking consistently. Gold acts as the ultimate monetary hedge during currency stress. Silver offers higher upside due to its dual monetary + industrial role. A balanced stack (often 50:1 to 100:1 silver-to-gold by value) remains popular.

What is the bigger picture behind India’s actions?

This is part of a global shift toward financial sovereignty. Countries are reducing reliance on Western benchmarks (like LBMA), increasing local control, and protecting reserves amid high energy prices and geopolitical tension. Central bank gold buying and domestic policy moves are two sides of the same trend.

How does this affect global gold and silver prices?

Long-term bullish. When a major consuming nation like India tightens controls and strengthens domestic pricing power, it often leads to higher regional premiums that eventually support global prices. Silver’s industrial importance makes it particularly sensitive to these supply-side moves.

What is the best strategy for stackers during these developments?

Stick to your long-term plan. Use Dollar Cost Averaging (DCA) and treat volatility as buying opportunities. Government interventions in India have historically reinforced the value of holding physical metal outside the banking system.

Disclaimer: This website and my YouTube channel/social media are for entertainment and educational purposes only. I am not a financial advisor, investment professional, or licensed expert. Everything I share is my personal opinion as just some dude on the internet with crabs. None of the content is financial, legal, tax, or investment advice. Past performance does not guarantee future results. Always do your own research and consult a qualified professional before making any financial decisions. You are solely responsible for your own investment and financial choices. I am not liable for any losses or decisions you make based on this content.

Important Opinion: Never go into debt to buy gold or silver. Do not use leverage, margin, or loans to purchase precious metals.