Report: Banks Halt Gold and Silver Import Orders Amid Supply Shortage and Customs Delays

Banks in India have halted new import orders for gold and silver due to a lack of formal government notification allowing bullion imports. As a result, over five tonnes of gold and eight tonnes of silver are currently stuck at customs. This situation has raised concerns about domestic supply and could impact global bullion prices, as India relies heavily on imports to meet its demand for these precious metals.

Customs Delays and Import Restrictions

The Directorate General of Foreign Trade (DGFT), which operates under the Ministry of Commerce and Industry, typically issues an annual notification at the start of each financial year. This notification specifies which banks are authorized by the Reserve Bank of India to import gold and silver. The last directive was released in April 2025 and was valid until March 31. However, banks are still waiting for a new order, leading to a significant backlog at customs. According to a bullion dealer in Mumbai, more than five tonnes of gold are currently held up without clearance, creating uncertainty in the market.

The delay in issuing the new notification has prompted banks to refrain from placing fresh orders with overseas suppliers. This cautious approach is further compounded by the fact that about eight tonnes of imported silver are also awaiting customs clearance. The lack of new shipments could tighten domestic availability, which is particularly concerning for India, the world’s second-largest consumer of gold and the largest buyer of silver.

Impact on Domestic Market and Global Prices

India’s heavy reliance on imports for gold and silver means that any disruption in supply can have significant repercussions. The current situation may lead to a decrease in domestic availability, which could, in turn, exert downward pressure on global bullion prices. Lower domestic demand might also help reduce India’s trade deficit and provide some support to the rupee, which has been struggling among Asian currencies this year.

Officials have taken measures to alleviate pressure on the currency, including advising refiners to limit spot dollar purchases. However, the ongoing uncertainty surrounding imports continues to weigh on the market. As inventories from earlier imports are gradually being depleted, the market is increasingly relying on sales from exchange-traded funds, which are currently experiencing outflows.

Concerns from Industry Experts

Industry experts have voiced concerns over the prolonged disruption in imports. Surendra Mehta, secretary at the India Bullion and Jewellers Association, emphasized the need for clarity and the resumption of imports. He warned that continued delays could lead to supply shortages and increased premiums, especially following Akshaya Tritiya, one of the country’s most significant gold-buying festivals.

A bullion dealer based in Kolkata suggested that the government might be intentionally slowing imports to manage the trade deficit. With rising prices of oil, gas, and fertilizers due to the ongoing conflict in Iran, India’s import bill is expected to increase significantly in April. This situation underscores the delicate balance the government must maintain between managing imports and ensuring sufficient supply for domestic consumers.

Trends in Gold Consumption

Recent data from the World Gold Council indicates that India’s gold consumption fell to 710.9 metric tonnes in 2025, marking a five-year low. This decline in consumption is concerning for the industry, especially as the market grapples with the implications of stalled imports. As inventories from previous imports are drawn down, the reliance on external sources becomes increasingly critical.

The current market dynamics highlight the challenges faced by the bullion industry in India. With the potential for supply shortages looming, stakeholders are calling for immediate action to resolve the customs backlog and restore normal import operations. The coming weeks will be crucial as the industry navigates these challenges and prepares for the upcoming festive season.

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