India's Bullion Trade Faces Import Challenges Amid Government Directive Delay

Import Orders Halted for Gold and Silver

The bullion market in India is encountering significant hurdles as banks have suspended new import orders for gold and silver. This pause is attributed to the lack of a renewed directive from the government, leading to several tonnes of precious metals being stuck at ports, unable to clear customs, as reported by industry sources.

India, recognized as the second-largest consumer of gold globally and the top buyer of silver, heavily relies on imports to meet its demand. Typically, the Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce and Industry, issues an annual notification that allows banks to import bullion. However, the previous authorization lapsed on March 31, and a new order is still pending.

Financial institutions had expected a routine update in early April, but the delay has resulted in market uncertainty. Trade insiders indicate that over 5 tonnes of gold and approximately 8 tonnes of silver are currently awaiting customs clearance. One bullion dealer expressed, "There is no point in placing new orders when earlier consignments cannot be cleared." This lack of clarity has compelled banks to stop new overseas purchases entirely.

Potential Supply Shortages Ahead of Festive Season

The suspension of imports could lead to supply shortages in the domestic market. Existing inventories from prior shipments are being depleted, and there is an increased reliance on liquidations from exchange-traded funds (ETFs). Surendra Mehta, secretary of the India Bullion and Jewellers Association, emphasized the need for clarity and the resumption of imports, warning that if the situation continues, premiums may rise following Akshaya Tritiya, a major gold-buying festival in India.

Additionally, gold demand in 2025 fell to a five-year low of 710.9 metric tonnes, as reported by the World Gold Council, indicating already weak consumption levels. The pause in imports may also be linked to broader economic issues. With rising global prices for oil, gas, and fertilizers—partly due to geopolitical tensions involving Iran—India's import bill is projected to increase.

In response, authorities have implemented measures to support the rupee, including advising refiners to limit dollar purchases in spot markets. A reduction in bullion imports could help decrease the trade deficit and stabilize the currency, which has been one of the weaker performers in Asia this year. However, diminished demand from India could also impact global gold and silver prices, reflecting the country's substantial role in the bullion market.