India's Currency Defense Crushes Silver Demand

India's silver imports have plummeted by 91% in just one year, from over 1,500 tonnes to under 50 tonnes. The sudden collapse of imports is not due to a decrease in demand but rather a result of the government's currency defense strategy.

The oil price surge in April pushed crude oil prices to $118 a barrel, causing India's oil imports to jump 53% and widening its merchandise trade deficit by 37.3%. To defend the rupee, New Delhi raised import duties on gold and silver to 15%, restricted most forms of silver, and implemented a licensing regime.

The result is that Indian households are now facing higher premiums for silver, with dealers charging $6.50 an ounce over official domestic prices. This premium sits on top of the existing 15% import duty and 3% sales levy, making it harder for buyers to access the metal.