India, the leading source of demand in the global silver marketplace, imported an impressive 990 million ounces (Moz) of refined silver between 2010-16 to meet its needs, according to a new report, the Indian Silver Market Study, recently released by the Silver Institute and produced by Metals Focus, the international precious metals consultancy.

The demand was driven by impressive growth in both the jewellery and silverware segments in the period since 2010, and the country today is globally the largest fabricator of both silver jewellery (over twice the size of China, its nearest competitor) and silverware.

India now accounts for nearly 16% of global silver demand India consuming 160.6 Moz in 2016, most of it imported. As a result, changes in Indian offtake can impact countries that supply bullion to India, the report states.

The report analyses the main drivers of this market, including demand, supply, investment, trade and economic factors. Jewellery and silverware account for more than half of Indian silver demand annually. While describing the jewellery and silverware market as ‘traditional’, the report adds that typically, silver jewellery is purchased by most income groups in India, whereas silverware is bought by the middle and affluent classes. Since the start of this decade, there has been a large expansion of demand in both markets, from around 39 Moz in 2010 to 88 Moz in 2016.

The Indian silverware market is the largest in the world and its importance is growing, representing 70% of the total global demand. The Indian jewellery market has experienced a rapid expansion in recent years; from 22.5Moz (700t) in 2010, this rose to an impressive 53.9Moz (1,677t) in 2016 and is forecast to surpass 65Moz (2,000t) during the next 4-5 years.

Aside from the domestic market, a large part of daily wear jewellery manufactured in India is exported, principally to Hong Kong, the UAE, the US, the UK and Thailand, with some Indian companies working closely with overseas retailers. In fact, in 2016 Indian exports surpassed $3bn, a more than six-fold increase compared to 2011. This largely reflects market share gains, especially in Hong Kong, the UAE and the US.

Indian investment demand for silver saw an unprecedented rise earlier this decade, the study said. Physical investment surged from 25.7 Moz in 2010 to a record high of 110 Moz in 2015. However, 2016 saw Indian coin and bar demand fall by around 70%, the result of higher silver prices and the government’s ever tighter clampdown on unaccounted money.

On the supply side, Indian mines produced 14 Moz of silver in 2016, making the country the fourteenth largest silver producer globally. Indian recycling of silver has experienced a steady fall over the last six years, with volumes down by almost 80%, from 16 Moz in 2010 to 3.4 Moz in 2016.  This lower scrap supply was primarily due to the slowdown in Indian economic activity.

“This report underscores India’s prominence in the international silver market. The country’s importance is poised to evolve even further as its economy grows and incomes rise,” stated Michael DiRienzo, Executive Director of the Silver Institute.