Trade sources indicate that Indian banks have suspended placing orders with overseas suppliers for gold and silver imports due to the government's delay in issuing the official directive authorizing precious metals imports. Consequently, several tons of precious metals are currently held up at customs.

As the world's second-largest gold consumer and the largest silver importer, India relies almost entirely on overseas purchases to meet domestic demand. A failure to secure new imports could lead to supply shortages within the country.

Weaker demand from India may exert downward pressure on international gold and silver prices. Simultaneously, it could help narrow India's trade deficit and provide support for the rupee, which has been one of Asia's worst-performing currencies this year.

Indian authorities have implemented several measures to alleviate pressure on the local currency, with recent actions including urging oil refiners to reduce their spot dollar purchases.

The suspension of gold and silver import orders by Indian banks and the resulting backlog of precious metals at customs due to the lack of an import authorization directive had not been previously reported by media.

The Directorate General of Foreign Trade (DGFT), under the Ministry of Commerce and Industry, typically issues a directive at the start of each financial year, listing the banks authorized by the Reserve Bank of India to import gold and silver.

The previous directive was issued in April 2025 and was valid until the end of the last financial year on March 31. Banks are now awaiting a new directive from the DGFT.

The DGFT has not responded to media requests for comment.

A precious metals trader at a private bank in Mumbai stated that banks had expected the DGFT to issue the directive in early April, as is customary, but no update has been provided so far. This has left over 5 tons of gold stranded and unable to clear customs.

The trader, who requested anonymity as they were not authorized to speak to the media, said the uncertainty surrounding the directive's issuance has led banks to halt new import orders from overseas suppliers.

Sources revealed that approximately 8 tons of imported silver are also stuck at customs, unable to clear.

Another precious metals trader commented that placing new orders is pointless when existing shipments cannot be cleared.

According to World Gold Council data, India's gold demand fell to 710.9 tons in 2025, the lowest level in five years.

Sources indicated that inventories of gold and silver imported in previous months are being depleted. The market currently relies on supplies from sales by Exchange Traded Funds (ETFs), which are themselves facing investor redemptions.

Surendra Mehta, Secretary of the India Bullion and Jewellers Association, emphasized the "need for a clear policy to ensure imports resume."

Mehta warned that if imports cannot be restored, supply shortages will emerge, and premiums on precious metals are likely to rise following Akshaya Tritiya, India's second-largest gold buying festival.

A precious metals trader in Kolkata suggested that the conflict involving Iran has driven up prices for oil, natural gas, and fertilizers, likely increasing India's import bill for April. This may be prompting the government to slow gold and silver imports as a measure to control the trade deficit.