India’s cultural affinity for silver underscores the country’s importance as a leading source of demand in the global silver marketplace. The breadth of the Indian silver market resonates across much of the country, currently the world’s seventh largest economy. The main drivers of this market, including demand, supply, investment, trade and economic factors, are discussed in the Indian Silver Market Study released by the Washington, D.C.-headquartered Silver Institute and produced by Metals Focus, the international precious metals consultancy.
India consumed 160.6 million ounces (Moz) of silver in 2016, accounting for 16% of global silver demand. The country’s dependence on imported metal means that changes in Indian offtake can impact countries that supply bullion to India. Between 2010 and 2016, India imported an impressive 990 Moz of refined silver to meet its needs.
Silver jewellery and silverware fabrication account for more than half of Indian silver demand annually. These are traditional markets, though the demand drivers and consumer profile vary considerably between both segments. 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. Of note, the Indian silverware market is the largest in the world and its importance is growing, representing 70% of the total global demand.
The Indian silverware market is the largest in the world and its importance is growing, representing 70% of the total global demand.”
Indian investment demand for silver saw an unprecedented rise earlier this decade. 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% to 36.6 Moz, 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.