New supply rules – what do they mean for the Indian silver market?

Market Highlights for Gold, Silver, and Electric Vehicles

• Gold ETP holdings and domestic premiums saw notable shifts in September and October 2026.
  • Indian gold ETPs added 3.1t in September, bringing total holdings to 124t (p. 1).
  • Gold returned to a premium for the first time in over three months as discounts narrowed from $30/oz at the start of October to positive levels in the final week (p. 1).
• Silver electric vehicle (EV) sales and domestic premiums recorded key adjustments.
  • Silver EV sales in India reached a record monthly high of around 334k units in September (p. 1).
  • Domestic silver premiums fell sharply from $1.7/oz at end-September to below $0.4/oz by end-October (p. 1).

Silver Market Performance and Price Corrections in 2026

• Investor sentiment reversed following significant price volatility.
  • Prices corrected by more than 50% from their peak, trading below Rs.200,000/kg (p. 1).
  • Despite the >50% correction, prices remain 40% higher year-on-year, keeping affordability a key concern for buyers (p. 5).
• Imports and overall demand experienced substantial declines.
  • India's silver imports fell 35% year-on-year to 2,818t between January and September 2026 (p. 1).
  • Full-year silver imports for 2026 are projected to be approximately 30% lower than in 2025 (p. 5).

Regulatory Changes and Trade Restrictions Impacting Silver Supply

• Government interventions elevated domestic silver costs and constrained imports.
  • The Prime Minister's appeal to avoid purchasing gold to curb foreign exchange outflows also cautious market sentiment for silver (p. 3).
  • Silver import duty was increased from 6% to 15% on 13th May 2026 (p. 3).
• Reclassification of silver imports restricted available trade volumes.
  • Silver was moved from the 'free' to 'restricted' import category, limiting imports to Directorate General of Foreign Trade (DGFT) licence holders (p. 3).
  • Small initial quotas caused silver imports to drop ~85% year-on-year to 182t between May and July 2026, driving local premiums up to ~10% over international prices (p. 3).
  • Documentation requirements, such as certificates of origin (COO), created supply bottlenecks and custom clearance delays (pp. 3, 5).

New Import Quota Framework and Market Outlook

• Updated rules in October 2026 eased quota limitations while restricting sourcing channels.
  • Traders and banks were allocated import quotas exceeding 10,000t over a six-month period, removing the COO requirement under the quota framework (p. 3).
  • Silver must be imported through the India International Bullion Exchange (IIBX), banks, or nominated agencies, while free trade agreement (FTA) imports are excluded (p. 3).
• Increased quota availability and seasonal demand are aiding supply normalization.
  • Over 300t of silver were imported in October via the IIBX, helping bring domestic premiums down to around $0.60/oz (p. 5).
  • Early signs of trade recovery are emerging at prices around Rs.190,000/kg ahead of Diwali (p. 5).
  • More than 10,000t of the six-month import quota is expected to remain underutilised due to lower average jewellery weights (p. 5).