Mumbai-India (Nov 5) Demand to buy silver amongst Indian households has pushed the country's imports of the precious metal to twice last year's level and may set a record in 2013, according to industry experts.
Between January and September, silver imports to India totaled more than 4,000 tonnes, already beating full-year 2012 says the Thomson Reuters GFMS consultancy.
The world's largest end-consumer of silver bullion as well as gold, India's current record demand to buy silver came at just over 5,000 tonnes in 2008.
That figure equals some 16% of total global demand, put around 30,000 tonnes per year. India's demand to buy gold, also the world leader, has been nearer 25%.
But after July and August this year saw silver imports of 1,000 tonnes as gold imports fell to zero, "India could import 6,000 tonnes of silver this year," reckons a special report from Japanese trading house Mitsui, "almost 1,000 tonnes more than the record imports seen in 2008."
"There has been a massive improvement in silver imports," agrees Bombay Bullion Association director Harmesh Arora, speaking to Reuters today, "and we will continue to see more.
"Investors are taking advantage of lower prices," says Arora, "and the lack of restrictions on silver imports as of now."
Noting the surge in demand to buy silver as prices fell steeply in 2011 from near all-time highs, "The response of Indian consumers to price weakness in silver can be spectacular," says Mitsui strategist David Jollie.
Even though silver cannot directly replace gold in many areas of India's cultural and religious culture, he adds, "The massive price decline for silver in April 2013 encouraged further buying."
Looking at the Indian government's aggressive anti-gold measures, "I don't think we will see any policy changes in silver," says Rajesh Khosla, managing director with refiner MMTC PAMP – part-owned by the government.
"There is less gold available, so rural people will gradually move to silver. It will be a more of a default option than a conscious choice," he believes.