According to Reuters, trade sources said that Indian banks had suspended orders for importing gold and silver from suppliers outside China, with large quantities of precious metals stuck at customs, as the government had yet to issue a formal order authorizing the import of these precious metals.
As India is the world's second-largest gold consumer and the largest silver buyer, with nearly all of its demand relying on ex-China purchases, the country could face a supply deficit without new imports.
Weak Indian demand could weigh on global gold and silver prices, while narrowing the country's trade deficit and supporting the rupee. The rupee has been one of Asia's worst-performing currencies so far this year.
Authorities had taken several measures to ease pressure on the rupee, including recently urging refiners to limit their spot dollar purchases.
The suspension of gold and silver import orders by Indian banks from overseas suppliers, as well as the backlog of large quantities of precious metals at customs due to the lack of a formal government authorization order, had not been previously reported.
The Directorate General of Foreign Trade (DGFT), under India's Ministry of Commerce and Industry, typically issues an order at the beginning of each fiscal year listing the banks authorized by the Reserve Bank of India to import gold and silver.
The order previously issued in April 2025 was valid until the end of the last fiscal year (March 31), and banks were currently awaiting a new directive from the DGFT.
The DGFT did not immediately respond to Reuters' request for comment.
A bullion dealer at a private bank in Mumbai said that banks had expected the DGFT to issue the order in early April as in previous years, but no new announcement had been made so far, resulting in more than 5 mt of gold stuck and unable to clear customs.
The dealer said the uncertainty over the timing of the DGFT order had led banks to suspend new import orders from overseas suppliers. The dealer requested anonymity as they were not authorized to speak to the media.
Sources said that approximately 8 mt of imported silver was also stuck and unable to clear customs.
Another bullion dealer said there was no point in placing new orders when previous shipments could not clear customs.
According to data from the World Gold Council, India's gold demand fell to 710.9 mt in 2025, the lowest level in five years.
Sources said that gold and silver inventory imported in previous months was being depleted, and the market was now relying on sales from exchange-traded funds, which were facing redemptions.
Mehta Surendra, Secretary of the India Bullion and Jewellers Association, said: "Clear rules are needed to ensure imports resume."
Mehta stated that without imports, a supply deficit would emerge, and premiums would rise after Akshaya Tritiya, India's second-largest gold-buying festival.
A bullion dealer in Kolkata said thatas the Iran conflict drove up prices of oil, natural gas, and fertilizers, India's import bill in April could rise, which might prompt the government to slow down gold and silver imports to control the trade deficit.
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