India’s silver imports slumped as policy measures aimed at defending the rupee, rather than any shift in demand, squeezed bullion inflows. In May 2026, India imported 46.8 tonnes versus 534.3 tonnes a year earlier, with importers reporting June lower again; the 91% fall marked the weakest month since July 2023. The clampdown followed a surge in crude during the Iran war, which pushed oil towards $118 a barrel in April; oil imports jumped 53% in a month, the trade deficit widened 37.3% to $28.38 billion, and the rupee fell around 7% to near 96 per dollar. New Delhi then raised gold and silver import duty to 15% from 6% on May 13 and introduced licensing, restricting most forms of silver in mid-May and adding grain and powder in June.
Market pricing reflects scarcity: by early July dealers quoted premiums of $6.50 an ounce over official domestic prices, compared with discounts of as much as $5.50 in May, on top of a 15% duty and 3% sales levy. The curtailed May volumes, roughly 487 tonnes or 15.7 million ounces, compare with a projected 2026 global shortfall of 46.3 million ounces, the sixth straight annual deficit. In 2025-26, gold and silver imports totalled $102.5 billion, up 26.7%, lifting their import-bill share to 14% from 11.8%, while silver alone reached $12 billion on 7,335 tonnes. Silver trades near $62.17 an ounce, up close to 6% in two days, and gold around $4,268, as oil fell roughly 10% on the week to three-week lows and September rate-rise odds dropped to 55% from 67%; London data showed 17% of silver unallocated to ETFs by end-September 2025 versus almost 35% at end-2024, with that spare portion later recovering.
Key Market Indicators And The Outlook For Policy Easing
We must closely watch the USD/INR exchange rate and crude oil prices over the next few weeks as key leading indicators. With Brent crude falling back into the mid-$70s from its $118 April peak, the pressure on India’s trade deficit is rapidly easing. This shift makes it highly probable that New Delhi will ease the 15% import duty and licensing curbs ahead of the crucial Diwali festival season in October.
Trading Strategy And Precedents For Silver Imports
For derivative traders, this setup is a classic coiled-spring scenario that warrants building long-volatility positions. While the current global market looks quiet due to India’s temporary absence, local Indian domestic premiums are holding at an extreme $6.50 per ounce. We suggest using silver call options or bull-risk reversals to position for a sudden, aggressive import return that the wider market has not yet priced in.
We can look at history for guidance, such as in July 2024 when India slashed precious metal import duties to 6%, triggering an immediate and massive surge in physical buying. With Metals Focus predicting a 46.3 million ounce global silver deficit for 2026, London’s already depleted vaults cannot easily handle a sudden return of Indian buyers. We should act now to secure long exposure before the official customs policy inevitably pivots.
