India's Rising Gold and Silver Imports Hit Trade and Currency
- India’s gold and silver imports nearly doubled in September amid festival demand and tax concerns.
- Higher imports are boosting gold prices but may widen India’s trade deficit and pressure the rupee.
- Chinese demand remains weak, contrasting with India’s strong buying ahead of Diwali.
India’s gold and silver imports surged sharply in September, nearly doubling compared to August, as banks and jewelers rushed to stock up before the festival season and anticipated tax hikes. This strong demand came despite gold and silver prices reaching record highs recently. The rush to import was also driven by traders trying to avoid higher import duties, which are calculated based on a government set base price that updates every 15 days.
According to trade and government sources, customs clearance for gold and silver imports has been unusually high, with a final spike expected by the end of September. Jewelers who had held back from buying earlier in the year are now paying premiums to build inventory for Diwali, when buying gold is considered auspicious.
Gold futures in India recently hit an all-time high of 116,900 rupees per 10 grams, while silver futures climbed to 144,330 rupees per kilogram. Despite these record prices, buyers kept chasing the metals, with investment demand growing significantly.
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This strong import activity supports rising gold prices but also risks widening India’s trade deficit and putting pressure on the rupee. Meanwhile, China, the world’s largest gold buyer, has seen weak demand with dealers offering heavy discounts, showing a clear contrast to the active Indian market.
Overall, India’s gold buying frenzy ahead of festivals is surprising the global market and keeping prices elevated.
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