India Issues Permits To Import 6,500 Tonnes Of Silver Over Next Six Months

New Delhi, Oct 23 (KNN) India has issued permits for the import of around 6,500 metric tonnes of silver over the next six months to meet domestic demand during the festive season, Reuters reported, citing four bullion dealers who received the permits.

India, the world’s largest silver consumer, relies on imports to meet more than 80 per cent of its demand. The increased allocation could support global silver prices while easing domestic premiums amid tight supplies.

“The government has allowed much more silver to be imported than the country is likely to need over the next six months, so this should help bring down domestic premiums,” said Chirag Thakkar, chief executive, Amrapali Group Gujarat, a leading silver importer.

Silver premiums over official domestic prices fell to 45 cents per ounce on Thursday, compared with as much as USD 2.50 per ounce last week, dealers said.

Import Restrictions Tightened Earlier This Year
In mid-May, the government restricted imports of silver in almost all forms with immediate effect. In June, it further tightened the rules by bringing silver grain and powder under the restricted category and requiring prior import authorisation.

India has also raised import duties on gold and silver to 15 per cent from 6 per cent as part of efforts to curb precious metals imports, ease pressure on foreign exchange reserves and support the rupee.

Festive Demand Yet To Recover
The higher import allocation has surprised market participants as domestic demand for silver jewellery and investment remains subdued following a recent price correction, dealers said.

“The festive season is here, but demand is yet to pick up. Many investors have burned their fingers in the recent sharp price correction and are now staying on the sidelines,” a Mumbai-based dealer with a bullion-importing bank told Reuters.

The extent to which the additional permits translate into actual imports will depend partly on the recovery in domestic demand over the coming months.

(KNN Bureau)