Silver exchange-traded funds experienced a sharp decline on Friday, with silver ETFs losing up to 4% according to latest market data. Nippon India Silver ETF fell around 4% to trade near ₹182, while Tata Silver ETF, Angel One Silver ETF, Mirae Asset Silver ETF, Motilal Oswal Silver ETF, Groww Silver ETF and ICICI Prudential Silver ETF recorded similar declines. The broader silver market also declined significantly, with MCX silver dropping 2.02% and COMEX silver falling 1.92% to $53.950 per troy ounce. This latest decline follows the earlier 4% crash on October 23 when India approved permits for 6,500 metric tonnes of silver imports over the next six months.
India has issued permits to import around 6,500 metric tons of silver over the next six months as the world's biggest consumer of the precious metal seeks to meet festive-season demand. According to Business Standard, traders and bank dealers this week received quotas covering as much as 6,000 tonnes of silver, with the permits valid for six months. The allocation comes as the world's largest silver consumer prepares for the likely oncoming sale-season rush, with four bullion dealers who received the permits confirming the decision. India relies on overseas purchases to meet more than 80% of its silver demand, making these imports strategically important for the domestic market and global prices.
Higher imports by India could support global prices while easing hefty domestic premiums that have risen due to tight supplies. As reported by Business Standard, Indian premiums dropped to around 50 cents an ounce over the global benchmark on Thursday, down from around $2 last week, with data from Metals Focus showing this substantial decline. "The government has allowed much more silver to be imported than the country is likely to need over the next six months, so this should help bring down domestic premiums," said Chirag Thakkar, chief executive of Amrapali Group Gujarat, a leading silver importer. The increased allocation is aimed at easing domestic supply shortages and reducing premiums even as demand for the precious metal remains subdued ahead of the festive season.
Domestic silver futures also recorded losses across multiple contracts on Friday. December futures fell around 3% to approximately ₹1,93,940 per kg, while March and May contracts traded near ₹1,99,985 per kg and ₹2,04,513 per kg, respectively. Since silver ETFs derive their value largely from the underlying domestic silver market, a decline in futures and local prices can translate into losses for investors holding these funds. The exact movement may vary across ETFs depending on expenses, tracking differences and their respective net asset values.
The latest permits mark a significant recovery from severe import restrictions that had stifled shipments to one of the world's biggest markets. According to Metals Focus, silver imports initially plunged to a fraction of the country's demand after the government introduced new licensing requirements in May. In June, monthly shipments hit a three-year low of just 37 tonnes, but that rose to 328 tonnes in September as limited permits were granted. "The new licences should be able to easily cover any demand spike," said Harshal Barot, principal consultant at Metals Focus Ltd. "As a result, we no longer see a tight market and premiums are likely to ease substantially in the run-up to Diwali."
While demand has picked up ahead of the festival season, silver consumption is expected to pale in comparison with last year's historic levels. As reported by Business Standard, stocking by retailers and wholesalers has been subdued, and fewer Indians are gifting silver this year. "We have not seen any meaningful dip-buying despite the price correction, as many investors are sitting on losses from silver bought last year," said Barot. The permitted volume appeared substantially higher than India's likely requirements over the next six months, with the additional supply expected to help lower domestic premiums. Last year, India imported over 7,000 tonnes of silver, a massive wave of buying that helped trigger a historic short squeeze in the global market, with prices hitting a record high above $121 an ounce in January before slumping after the West Asia war.
