Silver prices have experienced notable surges this year, boasting over a 25 percent increase year-to-date on both the Comex and domestic fronts. Navneet Damani, Group Senior Vice President and Head of Commodity & Currency Research at Motilal Oswal Financial Services, attributed this momentum to a confluence of factors including anticipated interest rate cuts, geopolitical tensions, varied economic indicators from the US, and a robust rally in industrial metals.
The spike in silver imports can be attributed to multiple factors. Primarily, heightened industrial demand, especially from the solar panel sector, has been a significant driver. Given silver’s role in photovoltaic cells utilized in solar panels, India’s efforts to expand solar energy capacity to meet renewable energy goals have sustained demand for the metal.
Additionally, investor sentiment favoring silver’s potential to outshine gold in the near future has further fueled import volumes. This surge in demand, both from investors and industrial sectors, has resulted in a historic upsurge in silver imports, propelling prices to unprecedented levels in 2024.
India imposes a 15 percent import duty on silver; however, under the Comprehensive Economic Partnership Agreement inked with the United Arab Emirates (UAE) in 2022, private traders can import silver via the India International Bullion Exchange (IIBX) at a reduced 9 percent duty, with an additional 3 percent in value-added tax.
While the current trajectory points to a substantial uptick in silver imports, market dynamics and existing inventory levels may temper this pace. As the industry absorbs the significant stockpiles amassed earlier in 2024, the influx of new imports might decelerate. Nevertheless, India’s strategic significance in the global silver market persists, with its import patterns under close scrutiny by global market participants.