As Demand Surges, India’s Silver Stocks Run Low — Here’s Why

Silver is trading at a high premium in India, more than 10% above global prices, due to increasing demand from investors. This surge in demand has led physically backed exchange-traded funds (ETFs) to stop new subscriptions. Jewelers are struggling to keep up with demand ahead of Diwali, a time when silver purchases typically rise. For the past four years, demand for silver has exceeded supply, reducing the surplus from earlier years. Even in 2025, supply is not keeping up due to the nature of silver mining, as 70% of it is a by-product of other metals.

Industrial demand for silver, especially from renewable energy and technology sectors, continues to rise, attracting more investment into silver-related assets like ETFs. Furthermore, increased shipments to the United States have added pressure to the market. India relies on imports for over 80% of its silver needs, but in early 2025, imports dropped by 42%, intensifying the shortage. Normally, the high premium would encourage banks to import more silver, but limited supplies and high demand have restricted this.

Silver ETFs experienced a record inflow, but they faced high premiums when trying to acquire silver, which led to a temporary suspension of new subscriptions. The shortage has made it difficult for manufacturers to produce silverware, while popular festive items like coins and bars are also trading at high premiums. As investors expect prices to rise further, many are reluctant to sell their silver, resulting in tight scrap supplies.