Indian Silver Imports Were Nearly 175 million Ounces in 2017.
Indian silver imports rose 52% in 2017, reflecting India’s increasing penchant for the grey metal. India imported 5,823 tons of silver in 2017 or approximately 173 million ounces, compared to 3,546 tons in 2016. Last month we reported that Indian gold demand as indicated by surging gold imports, was also on the rise. While India is well known as a nation devoted to gold as an auspicious gift and generational store of wealth, Indian silver consumption has become increasingly popular with Indians in recent years.
The Indian government has focused a lot of attention on ways to curb gold demand and imports through a variety of import duties and domestic taxes and even initiated a gold monetization scheme designed to get Indians to turn in their gold to in exchange for interest bearing bonds. Given that the value of silver is approximately 80 times less per ounce than gold, silver imports, even at 5,800 tons a year, do not represent a threat to India’s balance of trade. In 2017, India imported nearly 30 million ounce of gold worth approximately $36.5 billion. India’s silver imports of approximately 5,800 tons or 170 million ounces were worth approximately $2.9 billion.
While the Indian government’s anti-gold initiatives have dented official gold demand in India, black market sales and imports continue. Silver, like gold has been a direct beneficiary one of the fastest growing economies in the world that has put more money into the wallets of a growing Indian middle class. Silver costume jewelry sales have risen with the increase in Indian discretionary income. Indians prize silver for its beauty and also give it as gifts. It’s not substitute for gold, but it is viewed favorably and in strong demand.
Indian Silver Demand Sources: Solar, Jewelry and Investment Demand
India imports tens of millions of ounces of silver to support its solar energy program. India recently completed the world’s largest solar energy plant – silver is required for the construction of solar panels. Indians also purchase tens of millions of ounces in the form of jewelry, silverware and silver coins and bars.
Indian Silver Imports vs. Global Silver Mining Production
Overall demand for silver in India is such that it now constitutes about a one fifth of annual global silver mining production of approximately 875 million ounces. India has virtually no operating gold mines and a small silver mining industry. As such, most of Indian silver demand has to be met from imports.
To put India’s silver demand in context, in 2017 India imported approximately 173 million ounces of silver. In comparison during the five years from 2013-2017, U.S. Mint, the world’s largest producer of silver coins, sold 190 million American Silver Eagles.
With the price of silver hovering near, multi-year lows, we would not be surprised to see India’s silver imports continue to rise in 2018.
This article by BGASC is not, and should not be regarded as, investment advice or as a recommendation regarding any particular course of action.