Indian Banks Halt Gold and Silver Imports Amid Delay in Government Clearance

Indian Banks Halt Gold and Silver Import Orders Amid Uncertainty Over Government Directive

Indian banks have suspended gold and silver import orders from overseas suppliers, with a significant amount of the metals stuck at customs due to the lack of a formal government order authorising bullion imports. According to trade sources, more than 5 tons of gold and around 8 tons of imported silver are currently without customs clearance.

India's reliance on overseas purchases to meet nearly all its demand for gold and silver means that without fresh imports, the country could face supply shortages. As the world's second-largest gold consumer and biggest silver buyer, India's demand for these metals is substantial. The halt in import orders has the potential to impact global gold and silver prices, while also narrowing the country's trade deficit and supporting the rupee, which has been one of the worst-performing Asian currencies so far this year.

The Reserve Bank of India typically works with the Directorate General of Foreign Trade (DGFT) to authorise banks to import gold and silver. However, the DGFT has yet to issue a fresh directive for the current financial year, which has left banks uncertain about their ability to import these metals. The previous order, issued in April 2025, expired at the end of the last financial year on March 31, and banks are now awaiting a new directive.

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India's gold demand in 2025 fell to 710.9 metric tons, the lowest level in five years, according to the World Gold Council. Gold and silver inventories from previous months' imports are experiencing drawdowns, with the market now relying on sales from exchange-traded funds, which are seeing redemptions. Without imports, supply shortages will emerge, and premiums will rise after Akshaya Tritiya, the second-largest gold-buying festival in India.

The uncertainty over the timing of the DGFT order has prompted banks to halt new import orders from overseas suppliers. The government's decision to slow gold and silver imports may have been influenced by the rising import bill, which is likely to increase in April due to the Iran conflict. This could have prompted the government to take measures to contain the trade deficit.