Reuters

India`s banks have stopped silver imports after private traders bought large volumes of the precious metal from the United Arab Emirates to benefit from a lower duty, a total of five dealers and industry officials said.

India, the world`s biggest silver consumer, imposes a 15% import duty on the metal.

But the Comprehensive Economic Partnership Agreement, signed between India and the United Arab Emirates (UAE) in 2022, allows private traders to import silver through the India International Bullion Exchange (IIBX) at a 9% duty, and an extra 3% tax for value addition.

IIBX, India`s first international bullion exchange was set up in 2022, and by mid-December, the government had issued clearance that allowed dealers to trade silver.

Volumes have steadily grown and traders have imported 827 metric tons of silver via the IIBX platform so far this year, said a senior IIBX official. Like the other sources, he declined to be named as he is not authorised to talk to the media.

IIBX did not respond to a Reuters email seeking comment.

In 2023, India imported 3,625 tons of silver.

The lower import tax has enabled traders to offer silver imported via IIBX at a discount of around 2%, a Mumbai-based bullion dealer with a private bank said.

Silver imported via the IIBX platform has traded at discounts to the domestic benchmark price of around 1,700 Indian rupees ($20.52) per kilogram in recent weeks, another bullion dealer said.