From ₹123 Cr to ₹85,488 Cr: Why Is India Buying More Silver?
- Updated: 29 Sep 2026, 11:48 AM IST
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Silver has regained the market’s attention.
After rising by 138% in 2025, the metal has remained resilient in 2026, even as geopolitical tensions, including the US-Iran conflict, have periodically unsettled global markets.
But renewed interest in silver isn’t driven by geopolitics alone.
Tight physical supply, growing industrial demand, and increasing investor participation are changing the silver market’s fundamentals.
India is an important part of this story.
India is one of the world’s largest consumers of silver, with demand coming from jewellery, physical investment, coins and bars, industrial applications and investment products such as silver ETFs.
Physical investment has more than doubled over the past decade, rising from 36.5 million ounces in 2016 to 79.2 million ounces in 2025.
Investment in coins and bars has also more than doubled, rising from 7.1 million ounces in 2016 to 18.4 million ounces in 2025.
The shift is also visible in financial products.
Silver ETF AUM rose from just ₹123 crore in January 2022 to ₹85,488 crore by August 2026.
The growth reflects increasing investor access to silver through financial products, alongside continued demand for physical metal.
But India’s growing appetite for silver comes with a structural constraint.
India consumes around 5,000-7,000 tonnes of silver every year, while domestic mines produce only around 700-800 tonnes.
As a result, around 80-90% of India’s silver demand is met through imports.
Silver imports rose from $5.44 billion in FY24 to around $12.05 billion in FY26.
This makes global silver prices particularly important for India.
For 2026, the direction of silver prices could depend on how global supply keeps pace with demand.
The global silver market recorded a physical deficit of 40.3 million ounces in 2025, marking its fifth consecutive annual shortfall.
For 2026, the Silver Institute expects another deficit of around 46.3 million ounces, with total demand forecast at 1,112.6 million ounces against supply of 1,066.4 million ounces.
The supply side has been relatively slow to respond.
Global mine production has remained broadly around 830-850 million ounces a year for much of the past decade, while demand has continued to be supported by both investment and industrial applications.
This creates a market where additional demand cannot always be met quickly through new mine supply.
Industrial demand is also becoming an increasingly important part of the silver story.
Silver’s high electrical and thermal conductivity makes it difficult to replace in several applications.
Electric vehicles are one example.
An EV uses around 25-50 grams of silver, roughly 67-79% more than a conventional vehicle.
Global automotive silver demand is forecast to grow at a 3.4% CAGR between 2025 and 2031.
Solar is another major area of use.
Solar photovoltaic applications accounted for around 29% of industrial silver demand, compared with 11% in 2014.
India’s own expansion in clean energy adds another potential source of long-term demand.
At the same time, newer sources of technology demand are emerging.
Artificial intelligence and data centres are increasing demand for computing infrastructure and electronics, while electrification is increasing the use of silver in vehicles, charging infrastructure, power electronics and electrical contacts.
Silver therefore sits at the intersection of two different demand stories.
One comes from its traditional role as a precious metal, where geopolitical uncertainty and investment demand can influence prices.
The other comes from its industrial role, where electrification, digital infrastructure and renewable energy can influence consumption.
Its relationship with gold also helps put its valuation in context.
The gold-silver ratio measures how many ounces of silver are required to buy one ounce of gold.
The ratio currently stands at around 66.7:1, compared with a historical average of around 60:1.
A higher ratio means silver is trading at a lower relative value compared with gold.
Silver has also behaved differently from equities during some periods of market stress.
During the 2008-09 subprime crisis, silver rose 13% while the Nifty 50 fell 54%.
During the Russia-Ukraine war period in early 2022, silver rose 12% while the Nifty 50 fell 10%.
This highlights an important distinction.
Silver does not always move in line with equities, as its price is influenced by a different set of factors.
For investors, this can make silver a potential source of diversification within a broader portfolio.
At the same time, its growing investment and industrial demand mean silver is increasingly shaped by both financial market conditions and the real economy.
As silver ETFs continue to see rapid growth in India, exposure to the metal is becoming more accessible to investors.
Sources:
The content in this blog is intended purely for educational purposes. Any securities or mutual funds referenced are illustrative in nature and do not constitute a recommendation or endorsement by Kotak Neo. Investors are encouraged to assess their own financial situation and seek professional advice before making any investment decisions. For compliance T&C and disclaimers, visit www.kotakneo.com/disclaimer.
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Vishwa has spent 10+ years across fintech and FMCG doing what most people miss, connecting the dots, catching trends before they trend, and finding the angle nobody else thought to ask about.
At Kotak Neo, she drives content strategy for neoshorts, Kotak News Desk, and Investing Guide, turning market noise into something worth reading.
When she's not decoding markets, she trades charts for canvases, chasing art, painting, and architecture across cities she's yet to explore.
