India’s Directorate General of Foreign Trade (DGFT) has updated its roster of banks authorised to import gold and silver, marking a significant administrative refinement to the country’s precious metals trade infrastructure under the Foreign Trade Policy 2023. The amendment, formalised through modifications to Appendix 4B of the Handbook of Procedures 2023, represents the government’s ongoing effort to streamline import channels and enhance transparency in the precious metals sector—a critical component of India’s commodity trade worth billions of dollars annually.
The precious metals import regime in India has long been a tightly controlled domain, with the government limiting authorisation to select banking institutions to ensure regulatory oversight, prevent illicit trade, and maintain macroeconomic stability. Gold and silver imports constitute a substantial portion of India’s total commodity inflows, driven by consistent domestic demand from jewellery manufacturers, industrial users, and investment-grade accumulation. The country imported approximately 920 tonnes of gold in 2022 alone, valued at over $45 billion, making the banking authorisation framework a critical lever for managing foreign exchange flows and trade patterns.
The DGFT’s decision to update the authorised banks list reflects evolving policy objectives: broadening the institutional gateway for imports while maintaining stringent compliance standards. By expanding the number of eligible banks, the government seeks to reduce bottlenecks, enhance competition among authorised importers, and potentially lower transaction costs for end-users. This approach balances liberalisation with regulatory control—a hallmark of India’s graduated reform strategy in commodity trade. The move may also reflect feedback from industry stakeholders regarding import delays or capacity constraints experienced under the previous framework.
The amendment specifically targets Appendix 4B of the Handbook of Procedures, which serves as the operational rulebook governing import licensing, documentation, and compliance requirements. Banks must meet stringent criteria to secure authorisation, including capital adequacy standards, compliance track records, and anti-money laundering protocols. The updated list likely includes both new entrants and existing authorised entities, though the DGFT notification does not specify the exact number of additions. Financial institutions seeking authorisation must demonstrate capability to handle high-value transactions, maintain secure storage arrangements, and comply with all applicable regulations including those issued by the Reserve Bank of India and Financial Intelligence Unit.
For India’s jewellery and bullion industry—a sector employing over 7 million workers and generating significant export revenues—the expanded banking channels offer tangible benefits. Jewellery manufacturers relying on imported precious metals gain access to more competitive import options, potentially reducing procurement costs and improving supply chain resilience. Established banks already holding authorisation face enhanced competitive pressure, likely driving them to improve service quality and reduce fees. However, smaller regional banks newly authorised may require investment in compliance infrastructure and specialised personnel to handle precious metals transactions effectively.
The amendment carries broader macroeconomic implications for India’s current account deficit and foreign exchange management. Gold imports represent India’s single largest commodity import category, heavily influencing monthly trade balances and currency pressures. By optimising the import mechanism, the DGFT aims to ensure efficient utilisation of foreign exchange while maintaining sufficient oversight to detect and prevent smuggling, counterfeiting, and money laundering—vulnerabilities that previous frameworks struggled to fully address. The expanded authorisation framework also enhances India’s resilience against supply disruptions, a concern that gained prominence following global trade volatility in recent years.
Looking ahead, market participants will scrutinise which banks have secured new authorisation and whether the framework generates the anticipated efficiencies. The jewellery industry and commodity traders should monitor implementation timelines and any additional compliance requirements. Further policy signals regarding tariff structures, hallmarking mandates, or export incentives could follow, depending on government priorities regarding precious metals trade competitiveness. The success of this amendment will ultimately be measured through reduced import transaction times, narrowed domestic-international price spreads, and strengthened regulatory surveillance—metrics that will indicate whether the DGFT’s recalibration achieved its dual objectives of liberalisation and control.
