India's silver imports collapsed 91% in May 2026, the byproduct of a currency defense New Delhi launched after oil spiked toward $118 a barrel. Oil has since dropped back into the $70s, and that reversal is the detail that matters most for where Indian demand goes next.
India imported 46.8 tonnes of silver in May 2026, against 534.3 tonnes in the same month a year earlier — a 91% drop and the weakest month since July 2023. Monthly imports had run above 1,500 tonnes as recently as last October, during a squeeze that pushed the cost of borrowing silver in London to record highs. Silver itself trades near $62.17 an ounce, up close to 6% in two days, as the same oil move that triggered the import curbs now unwinds.
The trigger was oil, not silver
The Iran war pushed crude toward $118 a barrel in April. India imports most of what it burns, so the bill hit fast: oil imports jumped 53% in a single month. The merchandise trade deficit widened 37.3% to $28.38 billion. The rupee fell around 7% to a record low near 96 to the dollar, making it 2026's worst-performing Asian currency.
Bullion took the fallout because gold and silver imports had already reached $102.5 billion in the 2025-26 fiscal year, up 26.7%. 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, and most banks still lack the permits to bring metal in. Amrapali Group Gujarat's chief executive told Reuters: "imports have nearly come to a halt."
Scarcity is already showing up at home
By early July, dealers were 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. Withdrawals from Indian silver ETFs have already been absorbed, leaving Hindustan Zinc, the country's largest domestic producer, to fill a gap it was never sized for.
Why the deficit story isn't over
Removing roughly 487 tonnes of Indian buying — about 15.7 million ounces — makes the global market's forecast 46.3 million ounce shortfall for 2026 smaller, not larger, in the near term. But the demand behind those imports was mostly investment buying, which is the fastest kind to return once a rule lifts rather than the kind that disappears.
That's where oil comes back in. The same crude price that forced the rupee defense is now trading in the $70s, easing the pressure that justified the tax. If the trigger keeps reversing, the case for a 15% duty weakens with it — and any reopening should show up in Indian premiums first.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
