Article: In-depth Analysis of Amendment in Import Policy of ITC (HS) Codes 71131141 and 71131149 under Chapter 71 of ITC (HS), 2022

1. Introduction

The Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce & Industry, issued Notification No. 34/2025-26 dated 24 September 2025, bringing significant regulatory amendments to the import policy of specific jewellery items classified under Chapter 71 of the ITC (HS), 2022 – Schedule I (Import Policy).

With immediate effect, and valid until 31st March 2026, the import policy for the ITC (HS) codes 71131141 and 71131149, concerning silver jewellery, has been changed from “Free” to “Restricted”. This policy shift reflects the government's strategic regulation over the inflow of precious metal-based items, especially in light of economic, trade balance, and domestic industry considerations.

2. Legal and Policy Framework

The amendment has been made under the statutory powers vested in the Central Government by:

• Section 3 and Section 5 of the Foreign Trade (Development & Regulation) Act, 1992, and
• Paragraphs 1.02 and 2.01 of the Foreign Trade Policy (FTP) 2023, as amended from time to time.

This enables the government to regulate and restrict imports in the interest of national economic objectives, security, and to ensure the orderly development of trade.

3. Details of the Amendment

The following amendments have been made in the Import Policy of ITC (HS) 2022:

The term “Restricted” under the import policy implies that importers will now require a license or explicit permission from DGFT to bring in such goods into the country.

4. Policy Rationale and Economic Implications

a. Protecting the Domestic Jewellery Sector

India has a rich and vast domestic jewellery industry, particularly in silver and traditional craftsmanship. The availability of low-cost imported silver jewellery — especially from countries with lower production costs — has been undercutting domestic manufacturers and artisans.

By restricting imports, the government aims to:

• Encourage the consumption of domestically manufactured silver jewellery.
• Safeguard employment in the sector, which supports a large informal and MSME workforce.
• Reinforce India's position as a global manufacturing hub for jewellery under the ‘Make in India’ initiative.

b. Addressing Trade Imbalances

India imports a significant quantity of precious metals and related articles, leading to a negative trade balance in this sector. By curbing non-essential or non-strategic imports such as mass-produced silver jewellery, the government seeks to contain the current account deficit (CAD) and improve foreign exchange reserves.

c. Preventing Misuse and Undervaluation

Silver jewellery is often subject to undervaluation at the time of customs declaration, leading to revenue losses and misuse of free trade agreements (FTAs). Restricting imports through a licensing mechanism allows the government to:

• Exercise tighter control over valuation.
• Ensure compliance with quality standards and labelling norms.
• Monitor country-wise origin to prevent circumvention of tariff structures.

5. Procedural Implications for Importers

With the revised policy now in effect:

• Importers must apply for an import license from DGFT for importing items under the specified HS codes.
• The license will likely be granted based on justified end-use, value addition, or strategic necessity.
• DGFT may introduce an online application process through the DGFT portal, similar to other restricted items.

This could cause short-term supply chain adjustments, and stakeholders must swiftly adapt to ensure business continuity.

6. Global and Bilateral Trade Impact

This policy move may also be interpreted in the light of bilateral trade negotiations, particularly with countries exporting mass-produced jewellery to India. The decision could:

• Encourage foreign producers to set up manufacturing units in India via joint ventures.
• Promote technology transfer and investment inflow into the Indian gems and jewellery sector.

7. Timeline and Sunset Clause

It is pertinent to note that this amendment is currently applicable only until 31st March 2026. However, depending on its effectiveness, the restriction may be:

• Extended beyond the current deadline, or
• Modified based on inputs from trade associations, industry stakeholders, and macroeconomic indicators.

8. Conclusion

Notification No. 34/2025-26 represents a targeted trade policy intervention aimed at achieving a fine balance between domestic industry protection and external trade management. The shift from 'Free' to 'Restricted' import policy for silver jewellery is a strategic response to economic, fiscal, and industrial concerns that require a controlled import environment for non-essential luxury items.

While the policy imposes short-term compliance costs on importers, it opens avenues for domestic capacity building, value addition, and a more robust ecosystem for indigenous jewellery production. Stakeholders must remain proactive and compliant with the revised regime to ensure alignment with national trade objectives.