India’s Silver Import Curbs Trigger Shortages, Premiums Surge

India’s restrictions on silver imports have led to supply shortages in the country’s domestic market, pushing silver premiums to their highest level in six months. Dealers said premiums have climbed to around $6.5 per ounce, more than 10% above global benchmark prices, even as demand remains relatively subdued. India relies on imports for over 80% of its silver consumption.

The government introduced import restrictions in May and later expanded them to include silver grain and powder, requiring prior authorisation for shipments. Official data showed silver imports dropped sharply to 46.8 metric tons in May, compared with 534.3 metric tons during the same period last year, with imports declining further in June.

The import curbs are part of India’s broader efforts to reduce pressure on foreign exchange reserves and support the rupee. Market participants say domestic supplies are now tightening after earlier inventories were exhausted, and premiums could rise further as demand from the jewellery, investment, solar, and electronics sectors continues to recover.