The Logjam Breaks: Indian Banks Move 9 Tonnes Of Gold And 34 Tonnes Of Silver Through Customs In May

India's bullion import ecosystem has been gripped by a multi-week freeze that began at the start of FY2026-27. The resumption of clearances this month marks the first meaningful sign of recovery. According to the India Bullion and Jewellers Association (IBJA), all importing banks resumed clearing gold shipments by paying the 3% IGST, while the Commerce Ministry is working to restore the previous tax-exempt status for bank imports within the next few days.

How The Crisis Unfolded

Indian banks had halted gold and silver import orders from overseas suppliers, with tonnes of the metals stuck at customs as a formal government order authorising bullion imports had not been issued. The Directorate General of Foreign Trade (DGFT) eventually issued a notification on April 17 permitting 15 major banks - including SBI, HDFC Bank, Punjab National Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, and ICBC - to import gold and silver, with the authorisation valid until March 2029.

The 3% IGST Twist

The friction didn't end with the DGFT list. Banks importing gold had been exempt from paying the 3% IGST levy since India adopted the GST framework in 2017. The sudden enforcement of this tax on banks created the clearance bottleneck that followed. Traders noted a lack of clarity on whether imports of gold and silver would continue to remain exempt from IGST, which further slowed transactions. Banks have now broken the deadlock by paying the tax under protest while a formal correction is awaited.

The Cost Paid By The Market

Monthly gold imports had fallen from approximately 100 tonnes in January 2026 to an estimated 15 tonnes in April 2026, representing a 30-year low excluding the COVID-19 disruption period. The temporary freeze had already started hurting small jewellers, with the cost of sourcing gold jumping by as much as ₹1,200 per 10 grams. Average ticket sizes at retail counters reportedly dropped from ₹85,000 to ₹62,000 as customers shifted from 22K bangles to 18K or daily-wear pieces.

India's Structural Dependence On Bullion Imports

India imported $72 billion worth of gold in FY26, up 24% year-on-year, while silver imports stood at $12.1 billion, surging 150% year-on-year. Gold accounts for approximately 9% of India's total import bill in FY2026, making it the second-largest import category after crude oil, with domestic production of only 1 to 2 tonnes against annual consumption of 700 to 800 tonnes.

Key Highlights

• Indian banks cleared 9 tonnes of gold and 34 tonnes of silver through customs in May 2026
• Clearances resumed after banks agreed to pay the 3% IGST pending formal policy correction
• IBJA confirms the Commerce Ministry is working to restore tax-exempt status within days
• DGFT had authorised 15 banks including SBI, HDFC, ICICI, and Axis Bank to import bullion until March 2029
• Gold imports had hit a 30-year low of approximately 15 tonnes in April 2026, down from a monthly average of 60 tonnes
• Domestic gold prices exceeded international spot prices by over $20 per ounce at peak disruption
• Small jewellers faced procurement cost spikes of up to ₹1,200 per 10 grams during the freeze
• India's silver imports surged 150% year-on-year in FY26, making supply continuity especially critical

Sources: Economic Times, Business Standard, Business Today, IBJA, Emkay Research, Reuters, Impact Wealth, Discovery Alert