Silver imports in India have sharply increased at the beginning of the year. According to one report, in the first five months of 2013, silver imports to India rose by 26% compared to the first five months of 2012. If this trend will persist it could keep the price of silver from further plummeting. But the Indian government has been trying to curb the growing demand for gold and silver by imposing higher import taxes. So far it seems to work.
During the first five months of 2013 India imported 2,400 tons of silver, which represented a 26% gain in imports compared to 2012. India is among the top importer of silver in recent years. With the recent sharp drop in the price of silver to its lowest level in years, the demand for silver is likely to sharply rise, which will further augment silver imports to India. The sharp drop in gold and silver prices has already resulted in India cutting its import tariff on both gold and silver.
At the current pace, India may import nearly 5,800 tons of silver during 2013, which will be the highest levels of silver imports in recent years even before 2008.
But at the same time, India’s policymakers have been trying to curb the growing demand for gold by augmenting the import tax on gold and silver from 6% to 8%. This has led to a drop of 70% in gold and silver imports during June compared to May.
So the direction of silver imports in India is still questionable. If India’s policymakers keep imposing higher taxes it could curb down the demand for precious metals. But if gold and silver prices will continue to fall, the discount will pull up the demand for these metals. My guess is that the market could prevail, especially if gold and silver will resume their downward trend.
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