India, the world’s largest silver consumer, has already imported more silver in the first four months of 2024 than it did for the entire year in 2023, driven by rising demand from the solar panel industry and investors betting on silver’s outperformance over gold.
According to a government official, India imported a record 4,172 metric tons of silver during January to April, up significantly from 455 tons in the same period a year ago. In comparison, total silver imports for the whole of 2023 were 3,625 tons.
“Industrial and investment demand are driving up silver imports,” said a Mumbai-based dealer with a private bullion importing bank. “Silver prices haven’t done as well as gold in the past decade, but investors think it will do better than gold this year.”
Local silver futures have hit a record high of 96,493 rupees ($1,158.01) per kilogram on Wednesday, up nearly 28% so far in 2024, outpacing a 14% increase in gold prices.
Almost half of this year’s imports have come from the United Arab Emirates, taking advantage of a lower import duty under the Comprehensive Economic Partnership Agreement signed between India and the UAE in 2022. This agreement allows private traders to import silver through the India International Bullion Exchange (IIBX) at a 9% duty, plus an extra 3% in value added tax, compared to the standard 15% import duty.
However, the excessive imports have led to silver trading at a discount in India, and industry experts believe imports will slow down in the coming months as the already imported metal is consumed.
“In the coming months, silver imports will slow down. First, the industry will try to consume the already imported metal,” said an Ahmedabad-based importer.
The surge in India’s silver imports could support global silver prices, which are trading near their highest level in more than a decade. As the world’s biggest silver consumer, India’s voracious appetite for the metal is a significant factor in the global market.