India has increased gold and silver import tariffs to 15% from 6% to reduce imports and protect foreign exchange reserves. According to reports from Mint, this move immediately pushed up precious metal prices, with both gold and silver surging nearly 6% on Wednesday. However, silver prices declined on Thursday, falling 1.9% to ₹2,94,450 per kg on MCX, while gold prices dropped 0.7% to ₹1,61,027 per 10 grams after profit booking following the previous session's rally.
Despite the sharp rally in recent months, silver remains significantly cheaper than gold. As reported by Mint, silver prices touched around ₹4 lakh per kg at their peak and are currently hovering near ₹2.9 lakh per kg, while gold prices have climbed to nearly ₹1.5 lakh to ₹1.6 lakh for 10 grams. The gold-silver ratio has fallen below 55, indicating that silver has recently outperformed gold in terms of price performance.
Abhishek Kumar, SEBI RIA and Founder of SahajMoney, told Mint that while silver experiences higher industrial demand and growth potential, its extreme volatility makes it riskier than gold for small investors. He advises that small investors should treat silver as a tactical addition rather than a primary alternative to gold's stability for capital preservation despite higher entry costs. Vishal Dhawan, Founder & CEO of Plan Ahead Wealth Advisors, notes that the sharp increase in silver prices over the last year was driven partly by its safe haven precious metal status and industrial demand, but warns that global slowdown could result in lower industrial demand.
India's current account deficit is under pressure from precious metals imports, which the Centre views as non-essential. According to Mint, India spent a record $84 billion on gold and silver imports in the fiscal year to March, from $35.5 billion a decade earlier. Despite imports of gold and silver staying almost the same, rising prices have made imports much more expensive, increased money flowing out of the country and put pressure on the rupee. The duty hike could lead to a decline in business for the jewellery sector and potentially affect employment.
