Banks Pause Gold and Silver Imports Amid Delay in Government Approval

India’s bullion trade has hit an unexpected pause as banks suspend fresh gold and silver import orders due to delays in regulatory approvals. With shipments stuck at ports and no new directive issued, the disruption could impact domestic supply, prices, and broader economic indicators.

Import Freeze Leaves Bullion Shipments Stranded

Indian banks have temporarily halted new import orders for gold and silver from overseas suppliers, citing the absence of a formal government notification authorising such transactions.

As a result, several consignments—amounting to multiple tons—are currently held up at customs clearance points across the country. This unusual situation has created uncertainty in the bullion market, as traders and banks await clarity from authorities.

The development has not been officially announced but has emerged through industry sources, pointing to a regulatory bottleneck at a crucial time in the financial year.

Role of DGFT in Bullion Import Authorisation

The import of precious metals in India is governed by the Directorate General of Foreign Trade, which operates under the Ministry of Commerce and Industry.

Each year, the DGFT issues a notification listing banks authorised by the Reserve Bank of India to import gold and silver.

• The previous directive was issued in April 2025
• It remained valid until March 31, 2026
• A fresh order is typically released at the start of the new financial year

However, the expected update has not yet been issued, leaving banks unable to proceed with imports under regulatory compliance.

Why Banks Have Stopped New Orders

In the absence of a valid DGFT notification, banks are unable to legally initiate new bullion import contracts. This has led to a complete halt in fresh orders from international suppliers.

Industry insiders highlight key concerns:

• Regulatory uncertainty over import permissions
• Risk of consignments being held indefinitely at customs
• Financial exposure due to delayed clearance

A Mumbai-based bullion dealer noted that over 5 tons of gold are currently stuck without clearance, underscoring the scale of disruption.

Silver Shipments Also Impacted

The disruption is not limited to gold. Approximately 8 tons of silver imports are also awaiting customs clearance.

Traders argue that placing new orders under such conditions is impractical, as existing shipments remain unresolved. This has effectively slowed down the entire bullion supply chain, impacting wholesalers, jewellers, and investors alike.

India’s Dependence on Bullion Imports

India is one of the largest consumers of precious metals globally:

• It is the second-largest consumer of gold
• It ranks as the largest importer of silver

Since domestic production is minimal, the country relies heavily on imports to meet demand. Any disruption in imports can therefore quickly translate into supply shortages in the local market.

Demand Trends and Market Dynamics

Recent data from the World Gold Council indicates that India’s gold demand fell to 710.9 metric tons in 2025, marking the lowest level in five years.

The current import halt could further suppress demand, especially as:

• Prices remain volatile
• Inventory levels are gradually declining
• Market sentiment remains cautious

Additionally, existing stock from previous imports is being depleted, increasing reliance on alternative sources such as exchange-traded funds (ETFs), which are witnessing redemptions.

Impact on Prices and Trade Balance

The slowdown in bullion imports could have mixed economic implications.

Potential Downward Pressure on Global Prices

Reduced Indian demand—given its significant share in global consumption—may:

• Weaken international gold and silver prices
• Affect global trading volumes

Support for Rupee and Trade Deficit

On the domestic front, lower imports may:

• Help narrow India’s trade deficit
• Reduce pressure on the rupee

The Indian currency has been among the weaker performers in Asia this year, prompting policymakers to take measures to stabilise it.

Government’s Broader Economic Strategy

Authorities have recently taken steps to manage foreign exchange outflows and stabilise the currency.

One such measure includes advising refineries to limit spot dollar purchases, thereby reducing demand for foreign currency.

Some market participants believe the delay in issuing the DGFT notification could be a deliberate move to:

• Control rising import bills
• Manage currency volatility
• Align with broader macroeconomic objectives

Industry Concerns Over Supply Shortages

Trade bodies and industry leaders have expressed concern over the ongoing uncertainty.

According to Surendra Mehta of the India Bullion and Jewellers Association, clarity is urgently needed to resume normal import activity.

He warned that:

• Supply shortages could emerge if delays persist
• Premiums on gold may rise in the domestic market
• Seasonal demand could exacerbate the situation

Festive Demand May Worsen the Situation

The timing of the disruption is particularly critical, as India approaches Akshaya Tritiya, one of the most auspicious occasions for gold purchases.

Traditionally, gold buying surges during this festival, driven by cultural and investment motivations.

If imports do not resume in time:

• Retail prices could spike due to limited supply
• Jewellers may struggle to meet consumer demand
• Market premiums could increase significantly

Global Factors Adding Pressure

External factors are also influencing the situation. Rising geopolitical tensions, including conflicts involving Iran, have pushed up global prices of oil, gas, and fertilisers.

This is expected to:

• Increase India’s overall import bill
• Put additional pressure on the current account deficit

In such a scenario, slowing bullion imports may be seen as a strategic move to manage economic stability.

Conclusion

The halt in gold and silver imports by Indian banks highlights the delicate balance between regulatory processes and market dynamics. While the delay in DGFT’s directive has created short-term disruptions, it also reflects broader economic considerations around currency stability and trade management.

However, prolonged uncertainty could strain supply chains, push up domestic prices, and impact consumer sentiment—especially during peak buying seasons. As industry stakeholders await clarity, timely policy action will be crucial to restore confidence and ensure smooth functioning of India’s bullion market.