India handed out new silver import licenses this week to dealers and banks, with allocations that could total as much as 6,000 tons, said four individuals who requested anonymity because they are not authorized to speak publicly. The permissions last for six months.
These permits land after rules rolled out in May that forced buyers to seek approval for imports and to attach proof of origin to each shipment. As part of the same push to safeguard foreign currency reserves and support the rupee, the government also lifted import duties on gold and silver by more than two times.
The fresh paperwork helped thaw a supply freeze. After imports slid to just 37 tons in June, they rebounded to 328 tons in September, Metals Focus estimates, as authorities allowed only a portion of applications through.
Prices responded fast. Drawing on Metals Focus data, Monal Thakkar, who serves as managing director at Ashoka Global FZCO, said Indian buyers on Thursday were paying about 50 cents per ounce above the global benchmark, down from roughly 2 dollars a week earlier. Metals Focus Ltd. principal consultant Harshal Barot said the new licenses "should be able to easily cover any demand spike," adding, "As a result, we no longer see a tight market and premiums are likely to ease substantially in the run-up to Diwali."
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India brings in almost all the silver it uses, and buying typically firms up from October and peaks at Diwali, which falls on Nov. 8 this year. Last year's buying spree was enormous - more than 7,000 tons - and helped set off a historic short squeeze globally. Prices climbed further as speculators joined in, hitting a record above 121 dollars an ounce in January, then fell after the Iran war pushed up energy costs and stirred inflation worries. Spot silver was around 56 dollars an ounce on Thursday.
This year looks tamer. Barot said wholesalers and retailers have been hesitant to build inventory and that gifting is softer. His take: "We have not seen any meaningful dip-buying despite the price correction, as many investors are sitting on losses from silver bought last year." He added that consumer price views are no longer uniformly bullish, which has curbed bargain hunting.
More permits, valid through the next six months, plus premiums sliding toward 50 cents point to looser supply into the heart of the buying season. Imports already bounced from 37 tons in June to 328 tons in September once some licenses came through, while on-the-ground demand signals remain muted versus last year's surge. The bottom line: watch how Indian restocking and festival sales track against that easier import flow and a spot price sitting near 56 dollars.
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