Last October India imported more than 1,500 tonnes of silver, and by May the figure was under 50, for reasons that had nothing to do with demand.
The reason is oil, and a currency under strain. Defending the rupee meant making bullion expensive and difficult to bring into the country, and the world’s largest silver market went quiet almost overnight. What makes that worth reading this week rather than next quarter is that the oil price which set the whole thing in motion has just moved sharply the other way.
Silver trades near $62.17 an ounce as I write, up close to 6% in two days, with gold around $4,268 at a seven-week high. The move came from an unexpected direction. Iran and Oman moved toward a proposed framework for shipping through the Strait of Hormuz, oil fell roughly 10% on the week to three-week lows, and the market cut the odds of a September rate rise to 55% from 67% in two days. Cheaper oil, cooler inflation, lower rates. Tracing what that does to physical silver demand is the sort of work I do at Golden Meadow®.
The number
In May 2026, India imported 46.8 tonnes of silver against 534.3 tonnes in the same month a year earlier. Importers reported June lower again. That is a 91% collapse from a country that buys more than 80% of its silver from abroad, and it was the weakest month since July 2023.
Hold on to that October figure, because of what was happening around it. Indian monthly imports ran above 1,500 tonnes during the squeeze that sent the cost of borrowing silver in London to record highs. Borrowing cost matters because a trader who has sold silver forward has to source the metal from somewhere, and when the vaults thin out that rental price spikes. The buyer at the centre of that episode is the one that has now gone quiet.
To put the scale in proportion, the roughly 487 tonnes India did not import in May is about 15.7 million ounces. Metals Focus and the Silver Institute forecast the entire global market running a shortfall of 46.3 million ounces across the whole of 2026, the sixth consecutive annual deficit. One month of missing Indian buying is around a third of that.
Why it happened, and why it was never about silver
The Iran war pushed crude toward $118 a barrel in April. India imports most of what it burns, so the bill arrived immediately: oil imports jumped 53% in a single month and the merchandise trade deficit widened 37.3% to $28.38 billion. The rupee became the worst-performing Asian currency of 2026, falling around 7% to a record low near 96 to the dollar.
Precious metals were the other half of the problem. Gold and silver imports reached $102.5 billion in the 2025-26 fiscal year, up 26.7%, lifting their share of India’s total import bill to 14% from 11.8%. Silver alone hit a record $12 billion on 7,335 tonnes across that fiscal year.
So on May 13 New Delhi raised the import duty on gold and silver to 15% from 6%, days after the prime minister asked citizens to stop buying bullion for a year. A licensing regime followed. Most forms of silver were restricted in mid-May, June added silver grain and powder, and most banks still lack the permits they need to bring metal in. Amrapali Group Gujarat’s chief executive told Reuters that imports have “nearly come to a halt.”
Silver was collateral damage in a currency defence. Indian households did not stop wanting it. Their government made buying it expensive and difficult in order to protect the rupee.
Sources: Business Recorder / Reuters: India Silver Import Curbs Create Shortages | Business Standard: Imports Slump as Licensing Curbs Disrupt Shipments | SilverSeek: Indian Import Tax Driving Silver Shortage | Metals Focus and the Silver Institute, World Silver Survey 2026
What it looks like inside India
The domestic market shows the mirror image of the global one. By early July, Reuters reported dealers charging premiums of $6.50 an ounce over official domestic prices, more than 10% above benchmark, against discounts of as much as $5.50 an ounce in May. That detail matters more than it looks. Official domestic prices already include the 15% import duty and a 3% sales levy, so this premium sits on top of the tax rather than inside it. It is what buyers pay purely because the metal is scarce.
Two shock absorbers have been used up. Withdrawals from Indian silver exchange-traded funds released metal that softened the shortage until dealers reported those volumes absorbed. That left buyers leaning on Hindustan Zinc, the country’s largest domestic producer, to fill a gap it was never sized to fill.
Worth noting what kind of demand this is. India’s record silver imports in the last fiscal year were driven by fund buying as a hedge rather than by jewellery. The demand being shut off is investment demand, which is the fastest kind to come back.
What this means to Silver investors
Three things follow, and the first is uncomfortable.
In the near term this is bearish, not bullish. Removing 15.7 million ounces of buying in a month makes the global shortfall smaller, not larger. If the curbs hold through the restocking window that runs ahead of the October and November festivals, the 2026 deficit is likelier to come in under the 46.3 million ounce forecast than over it. Anyone treating India’s silence as a bullish setup has the sign backwards.
The second point cuts the other way. Demand suppressed by a rule is mostly deferred rather than destroyed. Nothing has changed about India’s appetite for silver, its wedding calendar, or its habit of holding metal rather than paper. What changed is a customs notification, and notifications can be withdrawn as quickly as they were issued. Metals Focus and the Silver Institute recorded Indian physical investment rising 33% to 79.2 million ounces in 2025, with another 68.3 million ounces going into exchange-traded products, for a record total the survey puts at 147.6 million ounces. That is the buyer currently locked outside the door.
The third is the one to watch, and it is why this belongs in front of you now. The curbs were a response to crude near $118 a barrel. Oil is now trading in the $70s. If it stays there, the pressure on the rupee eases, the trade deficit narrows, and the fiscal case for taxing bullion at 15% weakens with it. The trigger that closed this door is already reversing, and any reopening should show up in Indian premiums before it shows up anywhere else.
One connection deserves stating carefully, because it is easy to overclaim. Western vaults have looked calm for months. Metals Focus and the Silver Institute reported that only 17% of London’s silver was unallocated to exchange-traded funds by the end of September 2025, against almost 35% at the end of 2024, and that spare portion has since recovered. India’s absence is one plausible reason for the improvement, alongside softer solar demand, fund redemptions and higher recycling. The available data do not separate those causes. What can be said is that the buyer who caused the last emergency in London has been switched off by a decision taken in New Delhi for reasons that have nothing to do with silver, and that decision is reversible. I track that channel issue by issue in the Silver Catalyst.
The longer-term case for silver rests on a structural shortfall that is running into its sixth consecutive year, met each time by drawing down metal already sitting above ground. India’s absence changes the timing of that arithmetic. It does not change the arithmetic.
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