Indian Silver Imports Set Record in 2022

India’s love for gold is well-known. It is the second largest gold-consuming country in the world behind China. But Indians also have an affinity for silver.

Last year, silver imports into India hit a new record of  304 million ounces. That crushed the previous import high of 260 million ounces set in 2015.

More than half of the silver flowing into India is used in jewelry and silverware, and about one-third of India’s silver demand comes from investors in physical metal including silver bars and silver coins.

According to a report published by the Silver Institute, since 2010, Indian retail investors have bought around 730 million ounces of silver (22,700 tons). To put that into perspective, that represents about 90% of 2022’s total global silver mine production.

Over the last decade, the only years that silver investment demand fell in India were in 2016 and during the pandemic in 2020.

Silver investment in India was muted during the pandemic years but charted a healthy rebound in 2022. Investment in physical silver jumped to 79.4 million ounces last year, the highest level since 2015.

Indian silver demand is highest in rural and semi-urban areas. According to the Silver Institute report, this is a reflection of the relatively low entry price.

Furthermore, even fabricators and wholesalers buy silver as an investment during periods of low prices to be later converted into jewelry or silverware, or just to sell back when the price is high to take profits. Given the profile of investors, physical silver investment has so far been largely immune to competition from other asset classes, such as equities.”

The proliferation of silver exchange-traded products (ETP) in India has also spurred investment demand in the white metal.

The first Indian exchange-traded product was launched in September 2021. Currently, there are seven ETPs and five silver ETP Fund-of-Funds (FoFs, which invest in ETPs). As of the end of 2022, silver ETF holdings in India stood at an estimated 8 million ounces.

The Indian government’s crackdown on the gold market has boosted silver investment. According to the Silver Institute report, “The Indian government’s ongoing tough stance towards unaccounted money and the increased vigilance on gold transactions have benefited silver as investors have moved out of gold and in favor of silver.”

The Silver Institute report underscores the importance of India in the global silver market.

As the world’s sixth-largest economy and foremost silver fabricator, India also plays an essential role in silver and gold investment demand, historically recognized in that market as savings and investment assets, a reflection of the low penetration of banking and other financial products. Today, with new investment products available to Indian investors, India’s role in silver investment has the potential to grow even further.”

Increasing demand for silver in India is good news for the broader silver market.

Based on preliminary data, silver demand in 2022 is expected to chart a new all-time high of 1.21 billion ounces. That would be a 16% increase from 2021.

With mine production only projected to increase by 1%, the global silver market is forecast to record a second consecutive annual deficit in 2022. At 194 million ounces, this will be a multi-decade high and four times the level seen in 2021.