India's silver imports pick up as traders navigate new licensing rules

By Yihui Xie, Preeti Soni and Vignesh Radhakrishnan

 

Shipments of silver into India are picking up despite administrative hurdles, as traders seek to capitalize on attractive premiums after a new licensing regime disrupted imports.

 

Several traders and banks have recently secured licenses allowing them to bring more silver into the country, though with some unusual import requirements, according to people familiar with the matter, who asked not to be named as they’re not authorized to speak to the media. 

 

After securing permits, traders brought in about 89.81 tons in August through the India International Bullion Exchange, a platform hosted in Gujarat’s International Finance Tec-City, after six months of no imports, according to data compiled by Bloomberg. 

 

 

India is one of the world’s largest consumers of silver, and depends almost entirely on overseas supplies. The higher local prices for the precious metal create incentives for traders to sell silver to the country.

 

“The availability of silver has surely improved compared to July as we believe around 400 tons of licenses have been approved,” said Harshal Barot, principal consultant at Metals Focus Ltd. Increased silver supply in India has narrowed premiums for local over global prices, though the 30-day average remains around $4 an ounce as of Friday, according to Metals Focus. 

 

The South Asian country imposed licensing requirements for silver imports in May to preserve foreign-exchange reserves, sending shipments plunging to only a fraction of the country’s demand. Even now, shipments have not fully resumed as some market participants are not able to secure paperwork attached to the license in time. 

 

As part of the new measures, each shipment is expected to come with a certificate proving its country of production, Barot said. While a metal’s origin is typically mentioned as part of the shipping documents, a formal certificate issued by a government body is a new requirement, he said.

 

“This is not normal practice unless you were importing under free trade agreements,” he said. The requirements are causing delays as “many traders are still not able to clear the metal at customs due to the paperwork,” Barot said.

 

Traders are now more inclined to buy from countries that are able to provide the right documents faster, he added. 

 

Jewelers may start replenishing stocks ahead of the festival and wedding season later in the year, which creates more demand, said Renisha Chainani, chief research officer at trader Augmont Enterprise Ltd.

 

Still, even once approvals come, “shipping, customs clearance, and refining logistics add further weeks,” Chainani said. That means that “the market is running on existing inventory and trickle-through supply rather than genuinely improved flows,” she said.