India Faces Silver Shortage Ahead of Festival Season

As India gears up for the festive and wedding season, a sudden shortage of physical silver is sending ripples across the jewellery, bullion, and investment markets. Retailers and traders are struggling to keep up with rising demand, and consumers may soon feel the pinch in their pockets.

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Supply vs. Demand: A Perfect Storm

India relies on imports for more than 80% of its silver needs. However, imports have dropped sharply this year — down about 42% to 3,302 tons in the first eight months of 2025. On the global front, silver production is limited because around 70% of it is mined as a by-product of other metals, meaning supply cannot easily ramp up when demand surges.

The shortage is being felt locally too. Silver is now trading at up to 10% higher than international prices, and in cities like Ahmedabad and Mumbai, some jewellers and bullion dealers have temporarily paused new orders, citing difficulty in sourcing fresh stocks.

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Silver – Why Demand is So High

Festivals and Weddings
With Diwali and other major celebrations approaching, demand for silver coins, bars, jewellery, and gifts has surged. Many buyers are even switching from gold to silver due to high gold prices.

Industrial Usage
Silver isn’t just for adornment — it’s increasingly needed in solar panels, electronics, and other technology applications. Rising industrial demand is adding more pressure on already scarce supplies.

Investment Activity
Retail investors see silver as a cost-effective alternative to gold. This has led to a spike in buying physical silver and silver-related instruments. Some precious-metal ETFs have even halted new subscriptions because securing physical silver has become difficult.

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Impact on Markets and Consumers

Jewellery shops and bullion dealers are facing real operational challenges. Expect delays in deliveries, fewer product choices, and higher price premiums.

For consumers, this means paying more, dealing with limited availability, and possibly buying smaller or lighter silver items than they planned.

Even exports could be affected. The Gem & Jewellery Export Promotion Council (GJEPC) has warned that silver jewellery exports may suffer due to the shortage and rising costs.