Silver imports surge at India’s bullion exchange after new licensing rules

In May, the Directorate General of Foreign Trade moved certain categories of silver imports to the restricted list. Importers therefore needed government licences before bringing in those categories. This changed how silver could enter India and gave authorities more control over the trade.

As licences began to be issued, importers used IIBX to obtain silver. Industry estimates suggested that licences covering about 400 tonnes had been approved by mid-August. That figure represented permitted import quantities, not silver already imported. IIBX recorded 570 tonnes of silver trades in the three months after August, after no trades during the previous year.

The change also made the exchange more useful because banks operate with limited allocations. IIBX offered another route for licensed buyers to source silver. India imported 1,017 tonnes during the fiscal year through September, including 283 tonnes through IIBX. The exchange hopes licences remain available so silver can become a major business line.

The India International Bullion Exchange, or IIBX, is India’s first exchange designed for eligible jewellers and other buyers to import bullion directly. Bullion means precious metals traded in standard forms, such as gold or silver. IIBX was expected to build its main business around gold, but recent licensing changes have pushed silver to the forefront.

Eligible buyers use the exchange to source imported silver through an organised market. This differs from the traditional system, where gold and silver imports have mainly moved through nominated banks. The exchange model lets multiple buyers seek metal through one marketplace rather than depending entirely on how a bank distributes a limited quota.

Its silver activity has revived sharply. IIBX recorded 570 tonnes of silver trades in the three months after August, while spot gold imports were only 0.3 tonnes. It handled about 1,127 tonnes in calendar 2024 and expects more than 2,000 tonnes this financial year if DGFT licences remain available.

IIBX recorded 570 metric tonnes of silver trades in the three months since August. That was a dramatic change from the preceding year, when it recorded no trades. The surge shows how quickly a regulatory change and new import licences redirected activity toward the exchange.

Department of Commerce data provides another measure of scale. India imported 1,017 metric tonnes of silver during the current fiscal year through September. Of that amount, 283 tonnes came through IIBX. This equals about 27% of India’s silver imports during that period, a substantial share for a recently revived business line.

The exchange also handled about 1,127 tonnes in calendar 2024, roughly 16% of India’s silver imports. IIBX expects silver trading volumes to exceed 2,000 tonnes in the current financial year, but that target depends on the DGFT continuing to issue import licences. Silver prices have fallen 11.7% since August.

Nominated banks often work with limited silver quotas. When many customers want small quantities, the bank may favour one large order because it is simpler to allocate. This can leave smaller buyers without silver, even when their combined demand is substantial.

The article gives a clear example. If a bank has a 200-kilogram quota, one customer asking for all 200 kilograms may receive it instead of 20 customers requesting 10 kilograms each. IIBX addresses this problem by allowing multiple buyers to access silver through an exchange model. Demand is handled in a shared marketplace rather than through one bank’s preferred allocation.

That mechanism helps explain why importers switched to IIBX after licences began flowing. It can widen access and reduce dependence on a few banks and intermediaries. Experts also say direct exchange access could improve competition, reduce intermediary premiums and potentially provide better prices to end consumers. Its future success depends on attracting buyers beyond licence-driven demand.

The government’s restriction targeted non-essential silver imports and aimed to reduce pressure on the rupee. It also sought to stop importers from exploiting a difference between duty rates. By requiring licences for certain categories, the government gained greater control over how much silver entered India and through which channels.

The incentive arose after the Centre raised silver import duty to 15% in May. The India-UAE trade agreement allowed eligible importers to bring silver from the UAE at lower duty rates. That created a financial reason to source silver through the UAE rather than use routes carrying the higher standard duty.

Moving selected categories to the restricted list made those imports subject to government approval. This did not eliminate the lower-duty incentive, but it placed the trade under a licensing system. As licences started being issued, importers used IIBX to source silver. The policy therefore both restrained flows and redirected licensed activity into more controlled channels.

If DGFT continues issuing silver import licences, IIBX could turn its recent surge into a major business line. Its chief executive expects more than 2,000 tonnes of silver trading in the current financial year, subject to licence availability. Silver is now viewed as a second growth engine while gold imports remain disrupted by a quota-related legal dispute.

A proposed rule could strengthen that outlook. For example, an importer with a licence for 50 tonnes might be required to route 10 tonnes through IIBX, while sourcing the remaining 40 tonnes through banks or other permitted channels. This would guarantee the exchange a portion of each licensed shipment without closing other routes.

However, lasting growth may require more than regulation. Experts say IIBX must attract importers even when banks and other channels are available. Direct access could increase competition and reduce intermediary premiums. Without continued licences or a mandated share, recent volumes could weaken as buyers return to established supply routes.

Bullion means precious metal, such as gold or silver, held for trading rather than ordinary use. Import duties are taxes charged when goods enter a country. A trade exchange is an organised marketplace where eligible participants can buy and sell commodities under set rules. These ideas explain the roles played by silver, customs duties and IIBX.

Governments use import duties to change the cost of bringing metal into the country. They can use licensing rules to limit or monitor imports. Exchanges can provide an alternative route to banks and other intermediaries, allowing eligible buyers to access metal through a shared market. In the article, IIBX helps address banks’ limited quotas and uneven allocation of silver.

These tools matter because precious-metal flows affect trade balances, currency pressure and prices. India raised silver duty to 15% and restricted selected categories to control imports. The India-UAE agreement created lower-duty access for eligible importers. IIBX may improve competition and pricing, but its future depends on licences and buyer participation.