India's silver imports to double on rising demand for solar, investment

India's silver imports are on course to nearly double this year due to rising demand from solar panel and electronics makers, and as investors bet the metal will give better returns than gold, leading importers said on Friday.

Higher imports by the world's biggest silver consumer could give further support to global prices, which are close to their highest level in more than a decade. India imported 3,625 metric tons of the white metal last year.

This year's purchases could rise to between 6,500 and 7,000 tons due to the rising industrial demand, said Chirag Thakkar, CEO of Amrapali Group Gujarat, a leading silver importer.

India's silver imports in the first half of 2024 jumped to 4,554 tons from 560 tons a year ago, trade ministry data showed.

"There is a traditional demand for jewellery. People are also buying for investment purposes now that the duty cut has made silver more affordable," Thakkar told Reuters on the sidelines of the India Gold Conference.

India slashed import duties on silver in July to 6% from 15%, a step aimed at tackling smuggling.

Thakkar said investment demand had been "phenomenal" in the first half of the year as people bought silver anticipating that it would give them a better return than gold.

Local silver futures hit a record high of 96,493 rupees ($1,151) per kilogram in May and are up nearly 14% so far in 2024, slightly exceeding a 13% increase in gold prices.

Due to depleted inventories in 2023, industrial silver buyers have been stockpiling the metal this year to guard against rising prices, said a bullion dealer at a silver-importing bank.

India imports silver mainly from the United Arab Emirates, Britain and China.