Silver demand in India didn't disappear; It was waiting for licences

India's silver imports sank to about 1.5 million ounces in May and recovered to 15.5 million ounces in August, a rebound in demand that favours silver holders.

The buyers were still there. A higher import duty and new licence rules in May had shut the main route into the country. Once licences started to flow, the metal followed. For silver, that is good news over the next two to three months. India's domestic price now sits above the cost of importing, the condition that keeps metal moving in. The festival buying season starts on October 11. The limit is the year so far, which is still about a quarter behind 2025.

Silver's price has been under pressure from rising interest rates. It traded at $60.48 an ounce on the morning of October 1, on USAGOLD's daily report. Gold stood at $4,167.00. That is about half silver's January high. The Federal Reserve raised interest rates on September 16 for the first time since 2023. Long-term Treasury yields have risen since, and that weighs on a metal that pays no interest. At Golden Meadow®, we treat that as pressure on the price over the next few months, separate from the longer-term case built on a shortfall in supply. India sits on the demand side of that case.

Why the imports came back

In Issue #21, I discussed why India's silver imports collapsed after New Delhi raised the import duty to 15% in May. The government also added licence requirements for silver imports. Those rules made importing slow and expensive. Imports fell to 46.8 tonnes in May, about 1.5 million ounces, on trade ministry data. A year earlier, India had brought in 534.3 tonnes. June was lower still, on Reuters' reporting of the same data. The rules did not remove the households, jewellers and investors who buy the metal.

By August, traders and banks had begun securing those licences. Heraeus, the precious-metals group, put India's August imports at 15.5 million ounces. That was the first month above 10 million ounces since February. It was also 36% more than in August 2025.

The Heraeus number comes from the company's analysts, not from an official tonnage release. India's monthly trade release gives only the value of the month's silver imports, $1.02 billion. At August's silver prices, that value implies roughly 15 to 18 million ounces, in line with the Heraeus estimate.

The Silver Catalyst newsletter had carried a much smaller August figure, 2.9 million ounces. That number counted only the metal arriving through the India International Bullion Exchange, one import route among several. It understated the month by a factor of about five, and the premium issue corrects it.

Sources: Kitco, Heraeus update, September 28 | Kitco, India August trade, September 16 | Business Standard via Bloomberg, August 17 | MetalCharts, India premium, read September 30 and October 1 | MetalCharts, Shanghai premium, read October 1 | MetalCharts, SHFE silver, read October 1 | World Silver Survey 2026, Metals Focus and the Silver Institute | Shanghai Metals Market, China August silver trade

The Heraeus volume comes from the company's precious-metals analysts, not from an official tonnage release; India's monthly trade release gives only the value. The MetalCharts pages are live and roll forward; each reading carries its date, and the September 30 India reading is retained from our research file because the page has since updated.

The price signal points to more buying

Metal flows into India when silver costs more inside the country than it costs to bring in. A useful measure is the gap between the price on MCX, India's main commodity exchange, and the world price.

That exchange's price includes import duty but excludes sales tax. So the fair comparison is with the 15% duty alone. On September 30, the MCX price stood 17.0% above the world price on MetalCharts' conversion. It was higher still when rechecked on October 1.

A gap above the duty means an importer who brings silver in and pays the duty still sells it for more than it cost. That is what draws metal into the country.

The calendar adds to it. Indian households traditionally buy precious metals during the festival season, which opens with Sharad Navratri on October 11 and reaches Dhanteras on November 6. Heraeus flagged one risk. The monsoon was running about 15% below its long-run average by late September, a threat to rural incomes. Heraeus puts rural buyers at more than half of India's bullion demand.

China is not joining in

India's rebound is not part of a wider Asian scramble for metal. Shanghai's silver price sat 14.7% above the world price at the September 30 close. Most of that is China's 13% value-added tax, which is built into the Shanghai price. Once the tax is removed, the premium is only about 1.5%, close to the world price rather than a sign of scarcity.

China's own stockpiles point the same way. Silver held in Shanghai Futures Exchange warehouses has more than doubled since the end of 2025. China also exported far more refined silver than it imported in the first eight months of the year, despite export licensing.

What this Means to Silver investors

India's demand was held back by policy, not lost. The duty rise and licence rules in May closed the door, and August showed what happens when it reopens. Buying came back strongly, the domestic price moved above the cost of importing, and the festival season is days away. Over the next two to three months, that is a positive for silver.

It is not yet a trend. One month of restocking after a policy shock shows the import route works again. But India's imports for the year so far are still about a quarter below 2025. China is offering no support, with a premium close to its tax level, rising exchange stocks and steady exports. The next test is India's September trade data, due in mid-October. A second strong month would turn a restart into a trend.

The bigger picture is unchanged. Metals Focus and the Silver Institute forecast a 46.3 million ounce shortfall in the silver market this year, which would make it the sixth consecutive year in deficit. India imported 232.2 million ounces of silver in 2025 on the survey's figures, so its return as a buyer matters for that picture. It comes at a time when the price itself is under pressure from interest rates.