Indian banks restart gold imports after 3% IGST in 2026

What changed at customs

Indian banks have resumed importing gold and silver after a pause of more than a month, following agreement to pay a 3% integrated goods and services tax (IGST) at customs, according to trade and government sources cited by Reuters. The levy had prompted lenders to halt shipments at the start of the new financial year on April 1, when customs authorities began demanding IGST on the metal. A bullion desk head at a Mumbai-based private bank told Reuters the bank paid the 3% IGST to clear gold and silver shipments. Banks import most of India’s refined gold, which makes their ability to clear consignments important for overall supply conditions. The restart is expected to lift import volumes from depressed levels seen during the stoppage. But it also comes with macro implications linked to India’s import bill.

Why banks halted imports on April 1

The halt began when customs authorities started seeking IGST on gold imports by banks. When India adopted the IGST regime in 2017, gold-importing banks were exempted from paying the 3% levy. Trade participants said banks waited for more than a month for the government to issue an order that annually exempts them from paying the 3% IGST. As the government signalled it wanted to curb gold imports, banks “gave up hope” of getting the exemption order quickly, according to the Mumbai-based banker quoted by Reuters. With uncertainty on whether exemptions would be issued, banks chose not to clear shipments. That decision tightened inflows at a time when India’s bullion market also depends heavily on bank channels.

Imports restart after banks accept the 3% IGST

In recent days, banks have been clearing gold and silver shipments from customs, a government official told Reuters, requesting anonymity because they were not authorised to speak to the media. Trade sources also indicated they could not speak publicly. The official said banks cleared about 9 metric tons of gold and 34 metric tons of silver so far in May after paying the IGST. The data points to a rapid normalisation in clearances once banks decided to pay the levy rather than wait. The shift also suggests that logistical blockages at customs eased as taxes were settled. While the restart addresses immediate supply constraints, it also effectively accepts a higher cash outlay at the border for banks bringing in bullion.

April imports hit a near 30-year low

The disruption weighed on India’s monthly gold inflows. Reuters reported India’s gold imports in April were likely to fall to a near 30-year low of about 15 metric tons as banks halted shipments after customs authorities began demanding IGST. For context, the same reporting noted India imported 35 tonnes of gold in April 2025. The fall in April 2026 imports underscores the importance of policy clarity for nominated import channels. It also highlights how quickly tax and administrative changes can show up in headline trade numbers. A lower import month can temporarily ease the trade deficit, but can also shift demand to later months if buying resumes.

Domestic pricing signals: discounts widen

Dealers in India offered discounts of up to $17 an ounce over official domestic prices during the week cited in the Reuters report. The pricing was described as inclusive of 6% import and 3% sales levies. Discounts typically reflect local demand and supply conditions, as well as the flow of imports and inventories. In this episode, Reuters also noted gold demand remained weak. Even as import clearances resumed, the presence of discounts suggested buyers were not chasing prices higher. That matters for importers and lenders because weak demand can limit how quickly imported metal is absorbed by the market.

Government policy signals and the exemption question

Banks have historically relied on an annual process that exempts them from paying the 3% IGST. The Reuters report said banks waited for more than a month for such an order, but ultimately proceeded by paying IGST after the government signalled it wanted to curb gold imports. Separately, the material provided also referenced an order listing banks authorised to import gold and silver from April 1, 2026, to March 31, 2029. That order permits 15 banks, including State Bank of India, HDFC Bank and Bank of India, to import both gold and silver, while Union Bank of India and SBER Bank can import only gold. Reuters noted none of the banks made public comments in that context. The common thread across both developments is that timelines and notifications can directly influence whether metal is cleared or held at customs.

What it could mean for the trade deficit and rupee

Reuters said the resumption is expected to boost the country’s gold imports, widen the trade deficit and put more pressure on the rupee. The rupee was described as among Asia’s worst-performing currencies this year. Gold is a major import item for India, so a pickup in bullion inflows can widen the merchandise trade gap, especially if it coincides with other import pressures. A higher trade deficit can increase demand for foreign currency to pay for imports, which can add pressure on the exchange rate. The report did not quantify the expected deficit impact, but linked the direction of travel to resumed imports.

Key facts at a glance

Why the episode matters for bullion supply chains

The month-long disruption shows how quickly policy and administrative uncertainty can affect physical supply lines in India’s bullion market. Banks play a central role because they import most of India’s refined gold, and their pause immediately fed into April’s sharp drop in import volumes. The resumption, by paying the tax, indicates that market participants may prefer operational continuity even when costs rise. It also highlights how import flows, domestic discounts, and macro indicators such as the trade deficit can become linked during policy-driven interruptions. Any future clarity on exemptions and nominated importer lists will likely be watched closely, given the scale of India’s bullion demand and its sensitivity to rules at the border.

Conclusion

Indian banks have restarted gold and silver imports by paying the 3% IGST at customs, ending a stoppage that began on April 1 and contributed to April’s likely near 30-year low gold imports of about 15 metric tons. In May, banks have already cleared about 9 tons of gold and 34 tons of silver, according to a government official cited by Reuters. The next focus for the market is how official notifications and tax treatment evolve, and whether the resumption translates into higher overall imports that affect the trade deficit and the rupee, as Reuters flagged.