Silver imports slump as new licensing disrupts shipments

Silver imports into India have slowed sharply as a new licensing regime disrupted shipments, pushing local premiums to a multi-month high.

Most banks have yet to secure the permits needed to import the white metal and remain awaiting government approval, according to people familiar with the matter, who asked not to be identified because they are not authorised to speak to the media. Only a handful have obtained licenses, they said.

India is one of the world’s largest consumers of silver, with demand driven by jewelry, silverware, industrial use and purchases during festivals and weddings. With negligible domestic production, it depends almost entirely on overseas supplies brought in by banks and other authorised entities, making its buying a key driver in global silver supply and demand balance.

The country imposed licensing requirements for silver imports in May to preserve foreign-exchange reserves, sending shipments plunging to an estimated 29 tons in June from 747 tons in January, according to consultancy Metals Focus. The June total was estimated to be less than 1 per cent of the country’s annual silver demand.

The resulting supply squeeze has pushed the estimated 30-day average premium — the extra amount buyers pay above benchmark prices — to the highest since at least 2019, when the firm started tracking the data, Harshal Barot, principal consultant at Metals Focus, said on Wednesday.

“With imports choked off, physical silver has become scarce just as demand holds steady,” Renisha Chainani, head of research at Mumbai-based gold trading firm Augmont Enterprises Ltd., said. The domestic premium is nearing “squeeze-like territory,” she added. 

The committee responsible for approving import licenses meets only once or twice a month, contributing to the delays, according to a government official familiar with the matter, who asked not to be identified because they are not authorised to speak to the media. The new regime is intended to curb a surge in silver imports from countries including Thailand and the United Arab Emirates, which have free-trade agreements with India, the official said.

The new licensing system has left some traders confused. There is little clarity over how quotas are allocated and what happens once they are exhausted, they said. The government is now also seeking a certificate of origin, a requirement only introduced two months ago.

“Silver imports are now under restricted import category. Import requests are being processed as per norm,” according to a spokesperson from India’s commerce ministry. 

The licensing regime followed an earlier move by Prime Minister Narendra Modi’s government to more than double import duties on gold and silver as higher energy costs stemming from the conflict in the Middle East weighed on the rupee and foreign-exchange reserves.

The bottleneck could worsen ahead of India’s peak buying season. Jewelers typically begin replenishing inventories from July ahead of festivals in October and November, and the wedding season from November through March.

“We expect things to get tighter as wedding-season buying picks up,” Augmont Enterprises’ Chainani said.

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Published on July 23, 2026