Indian banks have been unable to import gold and silver for nearly five weeks, an unusually prolonged disruption that is pushing up domestic prices and raising concerns over supply shortages in the world’s second-largest bullion market.
According to traders, shipments have been stuck at customs since the beginning of the financial year on April 1 due to administrative delays and lack of clarity over taxation rules. While occasional disruptions are not uncommon, the current halt is significantly longer than usual and is beginning to strain the market.
Administrative delays stall imports
The issue initially arose when the trade ministry delayed publishing its annual list of banks authorised to import precious metals. Although the list was eventually released on April 17, imports have still not resumed as customs authorities are yet to issue the necessary clearance notifications required at ports and airports.
Additionally, uncertainty remains over whether gold and silver imports will continue to be exempt from integrated goods and services tax (IGST). Traders say this lack of clarity has further slowed down decision-making and import activity.
Jewellery demand adds pressure
The disruption comes at a time when jewellers are looking to restock following Akshaya Tritiya, an auspicious occasion traditionally associated with gold purchases.
With inventories running low and fresh supplies delayed, domestic prices have started to rise. Market data shows that the premium of local gold prices over international rates has crossed $20 per ounce this week, the highest level since early February.
Global price trends and local impact
International gold prices have declined by around 12% since late February, influenced by global economic uncertainties, including inflation concerns linked to geopolitical tensions. However, despite the drop in global prices, Indian consumers are not fully benefiting due to supply constraints.
India relies heavily on imports to meet its gold demand, with banks, refineries, and trading houses playing a central role in procurement.
Alternative route via bullion exchange
With traditional import channels blocked, traders have turned to the India International Bullion Exchange for sourcing gold. Located in Gujarat International Finance Tec-City (GIFT City), the exchange has witnessed a surge in activity.
April recorded the highest daily trading volumes in a year, and May has started on a stronger note. However, importing through this route is slower and requires higher working capital, making it less efficient for many buyers.
Impact on trade balance
Interestingly, the slowdown in gold imports could have a short-term positive effect on India’s trade balance. Gold is the country’s second-largest import item after crude oil, and reduced imports may help narrow the current account deficit.
Economists note that gold’s share in India’s import bill has increased from around 7% to over 9% in the financial year ending March 2026, highlighting its growing impact on the economy.
Conclusion
The ongoing import disruption underscores the sensitivity of India’s bullion market to policy and administrative delays. While the halt may temporarily support the country’s trade balance, prolonged uncertainty could strain jewellers, raise prices for consumers, and disrupt supply chains. A timely resolution, including tax clarity and customs approvals, will be crucial to stabilise the market.