The government has implemented significant changes to precious metals import policies, raising import duty on gold and silver by approximately 9%, including cess. According to reports from Mint, silver imports have shifted from 'free' to 'restricted' status, while gold imports now face tighter controls. These domestic measures were introduced to manage the national reserve, though they have raised concerns about local supply, pricing transmission, and premiums on exchange traded funds (ETFs).
Following the announcement, domestic prices did not fully reflect the 9% duty hike immediately. As reported by Mint, Chirag Mehta, chief investment officer at Quantum Asset Management Company, noted that prices increased by only 5-6% the day after the import duty hikes were announced, while duties were increased by 9%. Mehta attributed the partial transmission to large inventories already priced at healthy margins, or weak consumer appetite for a sharp 9% jump. He expects full price transmission over the coming weeks as fresh imports are required.
The biggest concern lies in ETF premiums, which represent the extra cost investors pay over the underlying net asset value. According to Mint reports, Manav Modi, assistant vice president at Motilal Oswal Financial Services, cautioned that panic buying could distort ETF pricing. Mehta highlighted that silver faces sharper constraints than gold, explaining that if demand picks up again given the restriction on supply, there could be an impact on premiums. Historical data shows silver ETF premiums have surged before, reaching 12% above NAV around October 9, 2025, due to festive demand and global supply deficit.
Experts suggest that immediate supply disruption is unlikely due to strong import performance in recent quarters. As reported by Mint, Manav clarified that good import numbers in the past quarter and the last two years make an immediate shortage unlikely. However, he warned that visible supply disruption would occur only if retail panic triggers abnormal demand. Mehta added that strong existing inventories have shielded the market so far, though fresh imports will eventually be necessary. Investors are tracking global cues including US Federal Reserve rate trajectory, global central bank actions, USD-INR movements, and Comex prices.
Market experts are advising caution for new precious metals investments. According to Mint reports, Pankaj Mathpal, founder of Optima Money Managers, suggested that investors with existing allocations should avoid increasing their positions, while those without exposure should consider staggered investing, especially via SIPs. He recommended maintaining a 10-15% allocation in precious metals through ETFs, noting that there's no reason to wait but right now is not the right time to enter gold or silver with a lump sum investment.
