Silver import curbs hit Titan, Vedanta; Kalyan Jewellers gains

The Indian government tightened silver import regulations on Tuesday, making Directorate General of Foreign Trade (DGFT) authorisation mandatory for eligible importers. The move is reshaping the cost outlook for jewellers and industrial users of silver, with shares of listed jewellery makers and metal companies splitting direction over the last two sessions.

Through a notification issued on Tuesday, the government said silver imports by RBI-nominated agencies, DGFT-authorised entities and qualified jewellers importing through the India International Bullion Exchange (IIBX) will now require a valid import licence. The notification covers silver in unwrought, semi-manufactured or powder form containing 99.9% or more silver by weight, including silver plated with gold or platinum.

Traders are watching how the tighter norms affect bullion availability, import volumes and procurement costs across the jewellery and industrial metals chain.

Silver licence rules split jewellery and metal stocks

Titan and Kalyan Jewellers diverge

Titan Company shares rose 2% to ₹4,178 on the National Stock Exchange on Thursday, recovering from the previous session's dip. Kalyan Jewellers gained nearly 3% to ₹362.55. Thangamayil Jewellery jumped roughly 9% to a 52-week high of ₹5,219.70, signalling that the market sees some jewellers as better positioned to absorb or pass through higher compliance costs.

Metal producers slide, Hindustan Zinc flat

Hindalco Industries shares declined 1% to ₹1,124.70. Vedanta fell to ₹327.65 on the NSE. National Aluminium Company dropped 4.55% to ₹417 from its previous close of ₹436.90. Hindustan Zinc held flat at ₹610, reflecting uncertainty about how the rules affect its silver by-product revenues.

Other metal and mining companies including SAIL, Jindal Steel, JSW Steel, NMDC and Lloyds Metals stayed in focus as the market priced in the potential for tighter import controls to shift domestic precious metals trade and industrial activity.

What the notification changes

The key structural shift is the removal of blanket exceptions. Previously, RBI-nominated agencies and IIBX-registered entities could import silver without a separate DGFT licence. Now every shipment must carry a valid import authorisation from the DGFT. The government did not specify a transition period or grandfathering clause in the notification.

Practical rule: For a jeweller that imports silver on consignment, the rule change adds a pre-clearance step that can add 3-5 working days to logistics. For a fabricator buying spot silver, it raises the risk that domestic premiums over international benchmarks widen during the clearance gap.

Import controls and domestic silver supply

Why the rule change matters

India is one of the world's largest silver consumers, with annual imports averaging 7,000-9,000 tonnes in recent years, predominantly for jewellery, industrial components and solar manufacturing. The new licence requirement effectively converts a relatively open import regime into a permit-controlled system.

Key insight: The mechanism here is not a tariff. It is a non-tariff barrier that increases administrative friction. The likely market impact is a short-term tightening of domestic silver supply, a bid in the MCX silver contract relative to COMEX silver, and a widening of the domestic premium that end-users pay.

Affected asset chain

• Jewellery retailers: Titan, Kalyan Jewellers, Thangamayil Jewellery. The larger brands with hedging programmes and diversified sourcing may absorb the friction; smaller players face margin pressure.
• Integrated producers: Vedanta's subsidiary Hindustan Zinc is a major domestic silver producer. If import supply tightens, domestic producers may increase output or raise asking prices. The stock's flat reaction suggests the market is waiting for concrete pricing data.
• Industrial users: The solar panel supply chain and electronics component makers are indirect victims. Silver paste is a key input for photovoltaic cells. If domestic silver prices rise, module manufacturing costs edge up.

The decision point for traders

What confirms the thesis

A sustained MCX premium over COMEX beyond the normal cost of carry (roughly 2-3% including freight, insurance and duty) would confirm that the import curbs are structurally tightening supply. Another confirming signal is a drop in IIBX silver clearing volumes, which would imply the exchange is losing its import-pricing advantage.

What weakens the thesis

If the DGFT fast-tracks licence approvals or issues blanket exemptions for solar-grade silver imports, the impact would be localised to jewellery categories. The government can also issue a clarification or circular that softens the compliance timeline.

Sector positioning

• Titan and Kalyan Jewellers have institutional coverage and hedging infrastructure. Their share price action this week suggests they are not the primary bearers of the cost shock.
• Thangamayil Jewellery's 52-week high run looks speculative; volume data from the NSE will clarify whether the move is institutional accumulation or short covering.
• Hindustan Zinc is the cleanest play on tightening domestic supply. If MCX silver premium widens, the stock should re-rate. The flat trade on Thursday is a watch item.

The government notification did not include a sunset clause or a review date. Trading desks should treat this as a structural change unless the DGFT issues an explicit relaxation.