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<\/div>\n<\/div>\n<\/div>\nIndia’s curbs on silver imports have triggered supply shortages in the country’s domestic market, driving premiums to their highest level in six months even as demand remains weaker than usual.As India relies on imports to meet more than 80% of its silver requirement, the sharp decline in overseas purchases could weigh on international silver prices while helping reduce the country’s trade deficit and easing pressure on the rupee.The supply squeeze follows a series of import restrictions introduced by the government. In mid-May, India placed immediate restrictions on imports of silver in almost all forms. The rules were tightened further in June, when silver grain and silver powder were also brought under the restricted category, making prior import authorisation mandatory.<\/p>\n In India, silver is used across a wide range of segments, including jewellery, coins, bars and industrial applications such as solar panels and electronics. Over the past year, however, investment demand has overtaken traditional consumption, driven by rising investor interest in silver ETFs.Also Read | Silver price crash: It was being called the ‘new gold’. So what went wrong?<\/a>“Silver imports have nearly come to a halt, creating a shortage in the Indian market,” Chirag Thakkar, chief executive of Amrapali Group Gujarat told Reuters.“The supply crunch has pushed domestic silver prices to a substantial premium over global benchmarks,” he added.According to bullion dealers, premiums over official domestic silver prices have climbed to $6.5 per ounce this week\u2014more than 10% above international benchmark prices. In comparison, the market was trading at discounts of up to $5.5 per ounce in May.Official trade ministry data showed that silver imports plunged to 46.8 metric tonnes in May, down sharply from 534.3 metric tonnes in the corresponding month last year.According to Thakkar, imports declined even further in June compared with May, worsening the supply situation in the domestic market.India has been taking steps in recent months to reduce imports of precious metals as part of a broader effort to conserve foreign exchange reserves and support the rupee.As part of this strategy, the government increased the import duty on both gold and silver to 15%, up from the earlier 6%.Following the duty hike in May, many investors chose to book profits and exit their holdings in silver exchange-traded funds (ETFs), said a Mumbai-based bullion dealer associated with a private bank.“The outflows from silver ETFs released additional metal into the domestic market, preventing an immediate shortage despite the tighter import restrictions. However, those supplies have now been absorbed, and the impact of lower imports is beginning to be felt,” the dealer said.At present, the domestic market is relying largely on supplies from Hindustan Zinc, the country’s largest silver producer, according to a bullion dealer based in Kolkata.“As demand continues to recover, a trend that has already begun, domestic premiums are likely to rise further,” the dealer said.India primarily imports silver from the United Arab Emirates, the United Kingdom and China.<\/div>\n\u2018Silver imports near a halt\u2019<\/h2>\n<\/p>\n