India approved about 6,500 tonnes of silver imports for the next six months, Reuters reported on 22 October2. A day later, local prices slid to an 11-month low1. For buyers of the metal, the two developments pull in different directions: more supply is on the way, into a falling market.
On 23 October, near-month MCX silver futures fell ₹6,799 per kg, or 3.4%, to ₹1,92,800 per kg1. That is more than 53% below the record ₹420,048 per kg set on 29 January, and more than 14% lower over ten sessions1. Mumbai spot silver traded at ₹1.95 lakh per kg, down from ₹2 lakh the previous day1.
Price, permits and premium all moved at once
Gold on MCX slipped below ₹1.42 lakh per 10 grams on 23 October, down more than 20% from January's peak of ₹1.81 lakh1. International spot gold fell more than 3.5% to about $4,015 an ounce, its lowest since 20 July1.
The permits arrived the day before. Four bullion dealers who received approvals told Reuters that the 6,500 tonnes would let the world's largest silver consumer meet festive-season demand2. India buys more than 80% of its silver from abroad2.
The premium moved fastest. Dealers said the premium over official domestic prices fell to 45 cents an ounce on Thursday, from up to $2.50 the previous week2.
The permit system explains why a premium existed at all. India restricted silver imports in nearly all forms in mid-May, then added silver grain and powder in June, making prior import authorisation mandatory2. The government also raised the import duty on gold and silver to 15% from 6%2. The government has been seeking to contain precious metals purchases to ease pressure on foreign exchange reserves and support the rupee2. The curbs bit: September silver imports were down 49.11% from a year earlier, and gold imports fell 81.27%3.
Crude is only half the story
Aditya Agarwala, chief investment officer at InvestValue, told The Economic Times that oil was driving the selloff more than fear was1. Brent above $110 a barrel has revived inflation fears, and markets now expect another US Federal Reserve rate rise before the end of the year1. Higher rates weigh on gold and silver because they pay no interest1. A recent rise in the rupee gave only limited relief1. The dollar was at ₹94.94 on 23 October, down from ₹96.78 on 8 October but still above its level at the start of the year4. Brent spot was $115.22 a barrel on 20 October, up 87.8% since the start of the year5.
Silver is also an industrial metal, and that side is weak. The Economic Times report points to soft solar-panel manufacturing in China and weaker chip demand during the technology selloff1. Copper, another industrial metal, fell to a five-week low on 22 October as a selloff in artificial intelligence stocks hit sentiment6. The fall is therefore part monetary, part industrial demand, not a single crude story.
What it means for landed cost
A domestic silver buyer pays three things: the international price, the import duty, and the local premium2. Two of the three moved in the buyer's favour this week. The premium collapsed2 and the international price is down by more than half from January1. The duty is the one part that does not help. It stands at 15%, up from 6%, adding far more to the bill than the lower rate did2.
Currency works in the same direction for now. The rupee has firmed against the dollar since early October, which lowers the rupee cost of dollar-priced metal, though the relief has been limited1, 4.
The permit remains the gate. Importers need authorisation before they can ship, whatever the price2. A manufacturer should ask its supplier three questions: does it already hold a permit, what volume does it cover, and when is the metal due to land?
Buy now or wait
There are good reasons to wait. Chirag Thakkar, chief executive of Amrapali Group Gujarat, told Reuters the 6,500 tonnes looked substantially higher than India's likely requirements over the next six months2. He said he expected the extra supply to pull premiums lower2. The scale of the allocation also surprised dealers, given weak silver jewellery and investment demand2. A Mumbai dealer at a bullion-importing bank said festive demand had yet to gain momentum, and that investors nursing losses were reluctant to return2. Gold jewellery tells a similar story: Dussehra sales were largely unchanged from a year earlier and Ganesh Chaturthi volumes fell 15%7.
There are also reasons to move sooner. The permits and the duty are tools the government uses to manage the rupee and reserves, so they can tighten again2. Today's window is an authorisation decision, not a permanent open border.
The useful distinction is between supply easing and demand collapse. A premium falling from up to $2.50 to 45 cents an ounce points to supply easing2. A 53% price fall, soft jewellery offtake and weak Chinese solar output point to demand and macro weakness1, 7. The first means metal is easier to get. The second means stock bought today can lose value quickly.
What to watch
Whether the 6,500 tonnes is fully used, and whether more tranches follow. Any change to the 15% duty or to the authorisation rules2. Dhanteras offtake, the test of festive demand7. Chinese solar-panel output and chip demand, which drive industrial silver use1. And the Federal Reserve and crude, which set the macro tone1.
The numbers
| Item | Level | Date |
|---|---|---|
| MCX silver futures (near month) | ₹1,92,800 per kg, down 3.4% | 23 October1 |
| Mumbai spot silver | ₹1.95 lakh per kg | 23 October1 |
| MCX gold futures | Below ₹1.42 lakh per 10 grams | 23 October1 |
| Spot gold | About $4,015 an ounce, down 3.5% | 23 October1 |
| Import premium | 45 cents an ounce, from up to $2.50 | 22 October2 |
| Import duty | 15%, from 6% | 2 |
| Share of silver imported | More than 80% | 2 |
| Approved imports | About 6,500 tonnes over six months | 22 October2 |
| Brent spot | $115.22 a barrel, up 87.8% this year | 20 October5 |