23
[ad_1]
NEW DELHI: Indian banks have stopped silver imports after private traders procured large quantities of the precious metal from the United Arab Emirates (UAE) to exploit a duty differential, according to five dealers and industry officials.
India, the world’s largest silver consumer, imposed a 15% import duty on the metal. However, the Comprehensive Economic Partnership Agreement inked between India and the UAE in 2022 permits private traders to import silver via the India International Bullion Exchange (IIBX) at a 9% duty, plus an additional 3% tax for value addition.
Established in 2022, the IIBX became India’s inaugural international bullion exchange, with the government granting clearance for silver trading by mid-December of the same year. A senior IIBX official revealed that traders have imported 827 metric tons of silver through the IIBX platform this year.
In contrast, India imported 3,625 tons of silver in 2023. The reduced import tax has allowed traders to offer silver imported via IIBX at a discount of roughly 2%, disclosed a Mumbai-based bullion dealer associated with a private bank. Another bullion dealer noted that silver traded via the IIBX platform has seen discounts compared to the domestic benchmark price, approximately at 1,700 Indian rupees ($20.52) per kilogram in recent weeks.
Silver is currently trading close to $25 per ounce on the international market, nearing its peak this year, largely in tandem with gold and influenced by fluctuations in the dollar. However, banks find themselves unable to extend discounts due to the 15% import tax imposed on silver. There has been a notable decline in demand, compelling banks to halt silver imports, as relayed by the dealers.
Most banks have shifted their focus to gold rather than silver. The government had offered concessions on imports to ensure the viability of the newly launched IIBX. However, this practice has sparked concerns about potential trade distortions and a loss of import duty revenue for the government, a senior industry official highlighted.
Over the past two months, the UAE has emerged as the primary source of silver imports. Besides the UAE, India also imports silver from Britain, China, Russia and Switzerland.
(With Reuters inputs)
India, the world’s largest silver consumer, imposed a 15% import duty on the metal. However, the Comprehensive Economic Partnership Agreement inked between India and the UAE in 2022 permits private traders to import silver via the India International Bullion Exchange (IIBX) at a 9% duty, plus an additional 3% tax for value addition.
Established in 2022, the IIBX became India’s inaugural international bullion exchange, with the government granting clearance for silver trading by mid-December of the same year. A senior IIBX official revealed that traders have imported 827 metric tons of silver through the IIBX platform this year.
In contrast, India imported 3,625 tons of silver in 2023. The reduced import tax has allowed traders to offer silver imported via IIBX at a discount of roughly 2%, disclosed a Mumbai-based bullion dealer associated with a private bank. Another bullion dealer noted that silver traded via the IIBX platform has seen discounts compared to the domestic benchmark price, approximately at 1,700 Indian rupees ($20.52) per kilogram in recent weeks.
Silver is currently trading close to $25 per ounce on the international market, nearing its peak this year, largely in tandem with gold and influenced by fluctuations in the dollar. However, banks find themselves unable to extend discounts due to the 15% import tax imposed on silver. There has been a notable decline in demand, compelling banks to halt silver imports, as relayed by the dealers.
Most banks have shifted their focus to gold rather than silver. The government had offered concessions on imports to ensure the viability of the newly launched IIBX. However, this practice has sparked concerns about potential trade distortions and a loss of import duty revenue for the government, a senior industry official highlighted.
Over the past two months, the UAE has emerged as the primary source of silver imports. Besides the UAE, India also imports silver from Britain, China, Russia and Switzerland.
(With Reuters inputs)
[ad_2]
Source link
