Increased imports of silver via the UAE route
The Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates, which was signed in 2022, has significantly increased silver imports via that channel in recent months. Over 40% (1,542 tons) of India’s total imports of silver in 2024 had arrived via the UAE in the first three months of the year.
This is mostly because of the disparity in duties. The CEPA route receives 8% of silver imports, compared to 15% under other channels. As of March 2023, it was 9%.
This coincides with a sharp increase in imports of silver. Data from India’s bullion research company Metal Focus, based in London, shows that the country has imported 3,730 tonnes of silver in the first three months of 2024, which is already more than the 3,475 tonnes imported in the same period last year. When imports reached a record-breaking 9,450 tons in 2022
The UK and Hong Kong used to be India’s top suppliers of white metal. But experts predicted that this would all change. Leading figure in the silver sector, Chirag Thakkar, director of the Amrapali company, said that silver bullion is sold in the domestic market at a discount of Rs 4,500 per kilogram because of the reduced tax. The need for solar energy-using plates is rising.
“The duty differential on import from UAE will continue to widen with 1 per cent reduction every year,” according the most recent World Silver Survey 2024. The UAE is anticipated to continue being India’s largest supplier of silver in the next years, barring any changes in policy or a decrease in import taxes on silver from the rest of the globe.
A few requirements must be met, however. An Indian silver importer who uses this method has to provide documentation proving that the silver has undergone 3% value addition and has been refined in the United Arab Emirates, along with a Certificate of Origin (COO). Since silver is not mined in the United Arab Emirates, local refineries are processing the metal to make sure it satisfies the 3% value addition standard before turning bars into grain. Imported silver is purchased in grain form via the bullion trade.
The industrial applications of white metal have increased, although investment seems to be declining. In 2015, India invested 3,435 tons of actual silver, according to the World Silver Survey report. Quantity terms of investment have decreased since then.
It decreased by 38% from 2740 tons in 2022 to 1534 tons in 2023. Chirag Sheth, principal consultant at Metal Focus, countered that while investment demand seems down when looking at quantity, when prices are taken into account, they have risen since 2015 and investment is still strong. This is due to the fact that, in contrast to gold, silver is not seen as a safeguard of wealth, and rising prices may also result in significant profit booking. Net investment seems modest as a consequence,” he said.
