No Silver For Diwali? Global Factors Behind India’s Silver Shortage And Soaring Prices Amid Festive Rush | 5 Points

Global silver supply crisis: With the festive season ahead, India, the world's largest consumer of silver facing a critical shortage of the precious metal. Prices have risen up to 10 per cent above global levels, with jewellers, traders, and investors fighting for supplies just a few days ahead of Diwali.

The shortage has prompted a number of silver exchange-traded funds (ETFs) to suspend new subscriptions, and jewellers have warned that buyers may face higher prices and delayed deliveries.

Global Shortage Deepens

The silver squeeze isn’t limited to India. According to international market data, global silver demand has exceeded supply for four consecutive years, eating into the surplus accumulated in earlier periods. Approximately 70 per cent of world silver output is a by-product of the mining of other metals such as copper, lead, and zinc—making it impossible for production to rise rapidly even when prices do.

Industrial use, especially from solar panels, renewable energy, and electronics, has accelerated. The United States' recent decision to include silver in its draft list of critical minerals tightened global supplies as shipments went to American refineries and inventories.

Imports In India Fall Drastically

India relies on imports for more than 80 per cent of its silver demand, utilised in jewellery, coins, bars, utensils, and industrial goods. Yet the nation's imports dropped by 42 per cent in the initial eight months of 2025, down to a mere 3,302 tonnes, as per customs information.

The decline in imports has met a rise in investment demand, particularly through silver ETFs, which recorded a historic ₹53,420 crore of inflows in September alone. Almost all of the silver imported last year has already found its way into investors' hands, with not much left for industrial and retail purposes.

Typically, high prices spur banks and bullion dealers to bring in more silver. This time, however, limited supply from top-producing countries and distribution bottlenecks in major trading centers have halted shipments. In London, the world’s largest precious metals market, lease rates for silver have surged above 30 per cent, reflecting the extreme shortage of physical bars available for trade.

ETFs Halt New Subscriptions

With local silver trading at higher-than-usual prices, physically backed ETFs had to pay high premiums to buy metal. As per Indian regulations, ETFs are required to have an equivalent quantum of silver against investor subscriptions. To avoid passing on these high costs, fund managers have temporarily suspended new purchases until prices stabilise.

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Prices Hit Record High

Jewellers throughout India report that the shortage has made it hard to acquire raw silver for ornaments and cookware. Silver bars and coins, such as festive season gifts, are now being sold at record prices. Consumers are keeping old silver with the hope of more price hikes, which has kept scrap availability low.

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Spot silver prices rose to USD 52.58 per ounce in London, breaking a 1980 record, as world markets saw a record rally fueled by robust demand for safe havens and supply shortages. Thus for Indian households, this means the traditional shine of silver this Diwali may come at a higher cost and possibly, a longer wait.