India’s silver imports are likely to fall by more than 40 per cent from a year ago to the lowest level in eight years, with investors booking profit by selling stocks after local prices rallied to a record high this month, leading importers said.

Lower imports by the world’s biggest silver consumer could weigh on global prices that have risen more than 50% so far in 2020.

“Investors, who bought silver at higher levels, got an opportunity to exit after a long time. For some, even after a decade,” said Chirag Thakkar, CEO of Amrapali Group Gujarat, a leading silver importer.

Their selling will reduce import requirement for 2020 to 3,000 tonnes, the lowest since 2012, he said.

India imported 5,598 tonnes of silver in 2019, according to data compiled by Refinitiv GFMS. The country fulfills most of its silver requirement through imports.

Investors are sceptical whether silver will hold recent gains, said Prithviraj Kothari, managing director of RiddiSiddhi Bullions.

“There is rush from sellers but very few buyers are there. Sellers are forced to accept hefty discount,” he said.

Local silver futures were trading around Rs66,800 per kg on Thursday after hitting a record high of Rs77,949 earlier this month. But in the spot market silver was offered at discount of more than 5,000 rupees per kg due to weak demand, Thakkar said.

India’s silver imports in the first seven months of the year nearly halved from a year ago to 1,900 tonnes and it is unlikely to rise again unless prices correct sharply, said a Mumbai based dealer with a bullion importing bank.

Demand from jewellery and industry is negligible as millions of people have lost or have to accept a pay cut, said the dealer, adding: “Sentiments are very weak in retail market.”

Meanwhile, jewellers in the traditionally lucrative Indian gold market are struggling - even while the metal’s value skyrockets - as coronavirus fears keep sales down, craftsmen at home and shops shuttered.

Months after India lifted its strict lockdown, the country’s biggest gold market Zaveri Bazaar remains desolate, with most stores closed and no customers in sight.

“We have been running this shop for the last 40 years and I have never seen the business hit such lows,” said 75-year-old Madhubhai Shah, one of only a handful of jewellers who decided to reopen.

The Mumbai market was hit hard by the March lockdown, which saw millions of migrant workers - including many gold craftsmen - flee India’s cities as their income dried up.

“Seventy per cent of our artisans have left for their villages and manufacturing units are all closed,” Shah said.

And with gold prices hitting record highs after soaring around 30 per cent this year, there is little incentive for customers to splash out on jewellery.

Even the impending wedding season, which traditionally kicks off in October and sees families spend a small fortune, has failed to buoy spirits or boost spending as India braces for its first recession in four decades.

Chiranjeevi Ahire and his fiancee decided to break with tradition for their December wedding by choosing not to buy any gold jewellery, even though it is considered auspicious and a status symbol.

“Previously we wanted the wedding to be a grand affair and follow all Indian traditions, just like our parents,” the Mumbai-based marketing manager said.  “But with the pandemic and uncertainty looming in the job market, we decided to cut down on our spending on gold and instead keep the money for a rainy day,” the 29-year-old said.

According to the World Gold Council (WGC), India’s gold consumption fell by a staggering 56 per cent during the first half of 2020 compared with the same period last year.

Demand during the April-to-June quarter plunged 70 per cent to 63.7 tonnes, the lowest since the 2008 global financial crisis.

Gold will eventually make a comeback in India as consumers recover their appetite, said Somasundaram P.R, Managing Director of WGC’s India operations.

“People who saved money because of cancelled holidays or expenditures will invest in gold,” he said.

But with the economy still in the doldrums and coronavirus infections approaching three million, would-be consumers like Ahire say they would prefer to wait it out. The twin blows of the lockdown and high prices meant customers did not empty their pockets even during the Akshaya Tritiya festival in April, considered a lucky time for Hindus to buy the metal.

Agencies