Indian banks halt gold imports over approval delays; tonnes stuck at customs ahead of Akshaya Tritiya: Report

Indian banks have temporarily halted imports of gold and silver due to delays in obtaining fresh government approvals, disrupting bullion flows into the country and raising concerns over supply ahead of a key festive buying season, according to Reuters.

As a result, shipments already ordered are now facing problems. Several tonnes of gold and silver are reportedly stuck at customs clearance points, as banks await regulatory clarity before proceeding further. The uncertainty has effectively frozen fresh inflows, tightening availability in the domestic market.

India is one of the world’s largest consumers of precious metals, second only to China in gold demand and the top global buyer of silver. The country relies heavily on imports to meet its needs, making it particularly sensitive to disruptions in supply chains. Even short-term delays can ripple through the market, affecting prices, premiums, and availability at the retail level.

The timing of the halt is especially significant. It comes just weeks before Akshaya Tritiya, a major Hindu festival widely considered auspicious for purchasing gold and other valuables. Demand typically surges during this period, with jewellers stocking up in anticipation of heightened consumer interest.

A prolonged disruption in imports could leave retailers scrambling to secure inventory, potentially driving up local prices.

Market participants warned that if the delay continues, premiums on physical gold could rise sharply as supply tightens. In such scenarios, buyers often turn to alternative channels, including recycled gold or financial instruments like gold exchange-traded funds (ETFs). Indeed, some dealers noted an increase in ETF redemptions, as investors liquidate holdings to meet physical demand in the absence of fresh imports.

Beyond the bullion market, the situation could have broader macroeconomic implications. India’s gold and silver imports contribute to its trade deficit, as these commodities are largely purchased using foreign currency.

However, analysts caution that any such benefit would likely be short-lived if demand remains strong and imports resume in a compressed timeframe later in the year. A sudden surge in imports to make up for lost volumes could offset any temporary gains in the trade balance.

Industry stakeholders are now urging the government to expedite the approval process to avoid further disruption. Jewellers, traders, and banks alike depend on predictable policy timelines to manage inventory and pricing strategies.

So far, there has been no official statement from the government explaining the delay or indicating when the new authorisation will be issued.

(With inputs from Reuters)