India imports far more silver than it produces, facing supply-demand mismatch.
Solar, EVs and AI data centres are driving silver demand sharply.
Strategic reserves, mining reforms, recycling and substitutes can secure supply chains.
Silver imports into India ballooned to over $9bn in 2025. This 4% increase over 2024 was observed despite silver prices climbing to peaks rarely seen before (rising by over 30% between September and December 2025).
The metal’s electrical and thermal conductivity, corrosion resistance and optical properties, combined with its malleability, make it exceptionally versatile and desirable for diverse applications. However, the recent demand surge is largely driven by the deployment of solar panels, electric vehicles (EVs) and semiconductors for data centres, which are powering the ongoing Artificial Intelligence (AI) revolution.
1 January 2026
Get the latest issue of Outlook Business
As these sectors expand, further upward pressure on silver prices appears inevitable, which makes India’s industrial development and green transition ambitions vulnerable.
Understanding the Demand Dynamics
Industrial applications account for approximately half of India's silver demand. The next largest consumer is the jewellery sector at about 20%. The remaining share is directed to coins, bars and silverware. Due to the rapid creation of clean energy facilities, solar photovoltaics applications now make up 29% of silver’s total industrial demand, up from 11% in 2014, as per a study by Oxford Economics. As the Indian government sets an ambitious target of installing 500 GW of clean energy capacity and achieving 30% of total passenger vehicle sales through EVs by 2030, silver is increasingly being recognised as a ‘green metal’.
On the AI front, data centres have become the cornerstone of digital infrastructure networks. Factoring-in the ever-increasing density and processing capacity of data centres, it is estimated that while the number of data centres in the world increased a modest ten-fold since 2000, their processing capacity grew by more than 50 times. Silver is an integral component in every server, processing unit, cooling system and switch that is part of this technology architecture. As AI permeates consumer-facing gadgets, Industry 4.0-related automation and smart infrastructure, the volume of silver-bearing components is expected to increase.
Optimising Silver Supply
Global annual silver production is estimated to be approximately 25,000 tonnes in 2024. However, “by-product mining” contributes about 65% of the global silver supply, while primary product mining constitutes about 20%. Here, ‘by-product mining’ means the extraction of silver during the mining of other base metals like copper, gold and zinc.
Consequently, the global market dynamics for these metals also influence the production of silver. Recycling, an ecologically benign option, completes the remaining supply stream. It must, however, be noted that recycled silver is typically less pure, limiting its applicability in high-precision applications. India’s silver production was about 800 tonnes in 2024 compared to annual consumption of approximately 8,000 tonnes, which is grossly insufficient to fulfil India’s growing ambitions in clean energy, advanced manufacturing and AI-driven industries.
Challenges in the Conventional Value Chain
A major concern for the industry is that many leading silver mines globally are approaching maturity. Identifying and developing new high-potential mining sites is a tedious and time-consuming process, fraught with high-probability of failures. It typically takes about a decade or more to transition from discovery to production.
As a result, the new supply is insufficient to meet the demands of industrial growth. Global silver production is witnessing a downward trend. In 2024, it was just sufficient to meet 80% of global demand 2024, with the gap widening further. While improvements in recycling efficiency may provide some relief, the structural supply constraints are expected to persist.
India’s Strategy for the Shiny Metal
To begin with, India can establish a ‘strategic reserve’ of silver to safeguard its manufacturing, technology and green industries against global uncertainties and price volatility. Like other precious metals, China maintains a strategic reserve for silver by purchasing it during periods of low prices and regulating exports accordingly. Policy reforms, such as streamlining mining operations and expediting exploration and mining clearance, are urgently needed to attract private investment. Leveraging diplomatic channels and entering joint ventures with foreign governments and companies can further help secure the overseas silver supply chain.
India can also create ecosystems that discourage the diversion of silver into non-strategic uses, such as coins, bars and silverware, while channelling it toward clean energy, electronics and advanced manufacturing. India can leverage its newly launched Research, Development and Innovation (RDI) fund to promote substitute materials and composite alloys that can reduce the use or completely replace silver in certain applications. The development of copper and silver composites for photovoltaic and semiconductor applications is a promising avenue. The rapid evolution of automobile designs could also help stabilise or lower silver use per vehicle.
Financial Incentives and Investment
Like other critical materials, the government can offer targeted financial incentives for silver mining, including reducing royalty payments upon successful exploration and dedicated research funding. Financial incentives, such as low interest working capital loans to scrap dealers and aggregators, along with fair compensation mechanisms for silver waste pickers, can make recycling more attractive and formalised. Capital subsidies for silver recycling facilities linked to recovery efficiency can incentivise the adoption of modern technologies that boost silver recycling.
The Exim Bank can offer long-term financing to Indian corporates seeking to invest in overseas silver exploration and mining projects. Public Sector Units, given their high appetite for risk and long investment horizons, can also play a strategic role in silver mining projects. Several central banks are increasingly diversifying their reserves beyond traditional safe assets such as major currencies (USD, EUR) and gold, with silver emerging as a stable asset class. In this context, the Reserve Bank of India (RBI) could consider allocating a small portion of its foreign exchange reserves, currently at $686bn, to silver, particularly as the metal is now recognised as eligible collateral for bank lending.
As silver takes the ‘gold medal’ in the strategic importance for India’s green transition and economic prowess, securing its supply chain is no longer optional. A coherent, long-term strategic policy, encompassing reserves, mining, substitution, recycling, and financial instruments, is essential to secure the supply chain of this critical metal and support India’s clean energy and industrial ambitions.
(Thakur is an alumnus of IIT Bombay and IIM Ahmedabad, while Jena is director at Climate and Sustainability Initiative and visiting senior fellow, London School of Economics and Political Science. The views expressed are personal.)
