India’s silver imports in the first four months of 2024 have already exceeded the total for all of 2023, driven by rising demand from the solar panel industry and increasing investor interest, according to government and industry officials. This significant uptick in imports by the world’s largest silver consumer is poised to support global silver prices, which are hovering near their highest levels in over a decade.
A government official, who requested anonymity due to a lack of authorization to speak to the media, revealed that India imported a record 4,172 metric tons of silver from January to April this year. This marks a staggering increase from the 455 tons imported during the same period in the previous year. For comparison, India’s total silver imports for 2023 amounted to 3,625 tons.
“Industrial and investment demand are driving up silver imports,” stated a Mumbai-based dealer from 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.”
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Reflecting this sentiment, local silver futures reached a record high of 96,493 rupees ($1,158.01) per kilogram on Wednesday, marking a nearly 28% increase so far in 2024. This performance significantly outpaces the 14% rise in gold prices over the same period.
The surge in silver imports is partly attributed to the Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates (UAE), signed in 2022. Under this agreement, private traders can import silver through the India International Bullion Exchange (IIBX) at a reduced duty rate of 9%, plus an additional 3% value-added tax, compared to the standard 15% import duty. This has led to nearly half of this year’s silver imports coming from the UAE, as traders take advantage of the lower duties.
An importer based in Ahmedabad, Gujarat, explained, “In the past few months, excessive imports were made, and silver is currently trading at a discount in India. In the coming months, silver imports will slow down. First, the industry will try to consume the already imported metal.”
The increased demand for silver is largely driven by the burgeoning solar panel industry, which relies on silver for its photovoltaic cells. Additionally, investors are increasingly viewing silver as a hedge, betting that it will outperform gold this year.
“The investment demand for silver is rising as it is seen as a better bet than gold in the current market scenario,” said a Mumbai-based bullion analyst. “With the solar industry’s growth and the favorable trading terms with the UAE, we can expect this trend to continue, albeit at a slower pace, as the market absorbs the current stock.”
This comes after silver prices reached their highest level since 2013 recently, crossing the $30-mark. The metal has surged by nearly 25% in 2024, outperforming gold and becoming one of the year’s best-performing major commodities. The gold-silver ratio currently stands at about 80, compared to the 20-year average of 68, indicating that silver remains relatively undervalued.
Information for this story was found via Economic Times, Reuters, and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
