India imports more silver in the first four months of 2024 than in all of 2023

India’s silver imports in the first four months of this year have already exceeded the total for all of 2023, fueled by increasing demand from the solar panel industry and investors banking on silver outperforming gold, according to government and industry officials.

This significant rise in imports by the world’s largest silver consumer could support global prices, which are currently trading at their highest levels in over a decade.

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India’s silver imports in the first four months of the year have already surpassed the total for all of 2023, driven by rising demand from the solar panel industry and investors betting on silver’s outperformance versus gold, according to government and industry officials. This surge in imports by the world’s biggest silver consumer could bolster global prices, which are trading near their highest level in more than a decade.

A government official, who requested anonymity, revealed that India imported a record 4,172 metric tons of silver from January to April. This marks a dramatic increase from the 455 tons imported during the same period the previous year. In 2023, India imported a total of 3,625 tons of silver.

“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 reflected this optimism, hitting a record high of 96,493 rupees ($1,158.01) per kilogram on Wednesday. This marks an increase of nearly 28% so far in 2024, significantly outperforming a 14% rise in gold prices over the same period.

Nearly half of this year’s silver imports have come from the United Arab Emirates (UAE) due to a lower import duty, explained an importer based in Ahmedabad, Gujarat. India generally imposes a 15% import duty on silver. However, the Comprehensive Economic Partnership Agreement (CEPA) signed between India and the UAE in 2022 allows private traders to import silver through the India International Bullion Exchange (IIBX) at a reduced duty of 9%, along with an additional 3% value added tax.

“In the past few months, excessive imports were made, and silver is now trading at a discount in India,” said the Ahmedabad-based importer. “In the coming months, silver imports will slow down. First, the industry will try to consume the already imported metal.”

The solar panel industry’s burgeoning demand is a significant driver of this increase. Silver is a critical component in photovoltaic cells, which convert sunlight into electricity. As India ramps up its solar energy capacity to meet ambitious renewable energy targets, the demand for silver is likely to remain robust.

Investor sentiment has also played a crucial role. With silver prices underperforming gold over the past decade, many investors see potential for a catch-up, believing that silver could offer better returns in the near term. This speculative demand, coupled with industrial consumption, has led to a historic spike in imports.

The surge in imports and subsequent price increase align with global trends, where silver prices are experiencing a significant upswing. Analysts believe that if the current demand patterns continue, silver could maintain its upward trajectory, benefiting from both its industrial applications and its status as a precious metal investment.

However, the future pace of imports may be tempered by the current inventory levels and market dynamics. As the industry digests the significant stockpiles accumulated in early 2024, the rate of new imports may decrease. Nonetheless, India’s strategic role in the global silver market remains pivotal, with its import patterns closely watched by market participants worldwide.

India’s unprecedented silver imports in early 2024 underscore the dual drivers of industrial demand and investor optimism. While the immediate future may see a slowdown in import volumes, the country’s influence on global silver prices and market trends is indisputable.