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India’s silver imports surged from January to April this year to surpass the total in 2023, marking industrial demand for the precious metal and investor optimism.
India imported 4,172 metric tonnes of silver from January to April, up from 455 tons in the same period a year ago, said a government official, who requested he not be named as he was not authorised to talk to the media. India imported 3,625 tonnes of silver last year.
“Silver price has witnessed a significant jump this year, posting more than 25 per cent gains year-to-date ( YTD ) on both Comex and domestic front. This move has been on the back of various factors like expectations of interest rate cut, geo-political tensions, mixed economic data points from the US, sharp rally in Industrial metals supporting silver as well,” said Navneet Damani, Grp Sr. Vice President, Head Commodity & Currency Research at Motilal Oswal Financial Services.
The surge in imports is due to several factors. Firstly, the industrial demand, particularly from the solar panel industry, has been a major catalyst. Silver is part of photovoltaic cells used in solar panels. As India ramps up solar energy capacity to meet renewable energy targets, the demand for silver remains robust.
Secondly, investor sentiment has played a pivotal role in boosting silver imports. Some investors see a potential for silver to outperform gold shortly. Demand and industrial consumption have led to a historic spike in silver imports, with prices hitting record highs in 2024.
India imposes a 15 per cent import duty on silver. However, the Comprehensive Economic Partnership Agreement, signed between India and the United Arab Emirates (UAE) in 2022, allows private traders to import silver through the India International Bullion Exchange (IIBX) paying 9 per cent duty, and an extra 3 per cent in value added tax.
While the trend indicates a significant increase in silver imports, market dynamics and inventory levels may temper the pace. As the industry absorbs the substantial stockpiles accumulated in early 2024, the rate of new imports may slow down. However, India's strategic position in the global silver market remains pivotal and its import patterns are closely monitored by market participants worldwide.
