Major Indian banks have been unable to import gold and silver for five consecutive weeks. This unusually prolonged disruption is driving up domestic prices and threatening supply shortages in the world's second-largest precious metals market. According to traders with direct knowledge of the situation, shipments have been stuck at customs since the new fiscal year began on April 1st, due to administrative bottlenecks and a lack of clarity regarding tax policies.
While Indian lending institutions are familiar with occasional import disruptions for precious metals, the current delays could lead to shortages in the local market. Jewelers are attempting to replenish stocks following the Akshaya Tritiya festival, an auspicious time for buying gold and silver. "The duration of the import standstill is unusually long," said Sunil Kashyap, Managing Director of trader FinMet Pte Ltd. "The situation is becoming increasingly tense," as jewelers seek to take advantage of lower international gold prices after the festival.
International gold prices have fallen approximately 12% since late February. This decline is attributed to the energy shock from the Iran conflict, which pushed up inflation and increased the risk of interest rate hikes—a negative factor for non-yielding gold. India relies heavily on imports for most of its gold, with banks, traders, and refiners being the primary buyers. However, lenders were unable to make purchases in the first half of April because the Ministry of Commerce delayed releasing the annual list of banks authorized to import precious metals.
Even after the list was published on April 17th, procurement remains stalled because customs authorities have not yet issued the necessary individual clearance documents, which port and airport officials require before releasing incoming cargo. Kashyap noted that the only way to import precious metals since early April has been through the India International Bullion Exchange (IIBX) located in Gujarat's GIFT City. Trading volume on the exchange has surged, with daily transactions in April reaching their highest level in a year and an even stronger start in May. However, traders report that importing via IIBX takes longer and ties up working capital.
Banks are still seeking clarification on whether gold and silver will be exempt from the Integrated Goods and Services Tax (IGST), according to traders who requested anonymity due to the sensitivity of the information. They indicated that gold and silver previously enjoyed an exemption, but it is currently unclear if this policy will continue. The Department of Financial Services and the customs department did not immediately respond to emails seeking comment.
Although demand for gold has been weak due to soaring international prices, the import delays have caused significant supply disruptions, pushing up domestic gold prices in India. Data from the World Gold Council shows that the premium for domestic gold over international prices in India exceeded $20 per ounce this week for the first time since early February.
The disruption in gold imports could have a positive impact on India's trade balance, as gold is the country's second-largest import item after crude oil. Madhavi Arora, an economist at Emkay Global Financial Services, stated that the import pause has a "mildly positive impact on India's April trade balance and current account deficit." She pointed out that gold's share of total annual imports has risen from an average of about 7% to over 9% in the fiscal year ending March 2026.
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