Top 6 Reasons How Industrial Demand Impacts Silver Rate in India

Silver as Both a Precious Metal and an Industrial Workhorse

While gold is generally classified as investment or ornamental in nature, it is the duality of silver that makes it unique. It has both cultural and investment value, but it is a core component of many industrial uses.

This unique use lends a unique market dynamic to silver, and isolates the price of silver as much more sensitive to manufacturing cycles and technological advancements.

Today, approximately 60% of global silver demand stems from various industries, including solar energy, electronics, automotive (including electric vehicles), and medical technology. With India fast tracking its clean energy transition and accelerating its digital initiatives, the nation's industries now use higher amounts of silver than ever before.

The Boom in Demand in the Solar Sector

One of the largest driving forces of silver demand, globally and in India, is the solar photovoltaic (PV) industry that uses silver as a critical input in solar panels, due to its superior electrical conductivity. As India seeks to expand its renewable energy base via government led initiatives such as the National Solar Mission, the silver inputs into solar panel manufacturing will increase over time.

According to data from the Ministry of New and Renewable Energy (MNRE), India plans to achieve solar power production capacity of 280 GW by 2030. Each solar panel uses a small amount of silver and adds to the cumulative demand. Analysts estimate that the solar industry could account for 15% of India's overall silver consumption by the end of 2025.

Electric Vehicles (EVs) and the Automotive Push

Another industry that is launching silver demand is the electric vehicle (EV) industry. Silver is consumed in several electrical components within EVs, including batteries, inverters, and wiring systems. As India’s EV sector undergoes exponential development, fueled by government subsidies and private investments, industrial demand for silver is further supported.

According to recent data, EV sales in India have expanded by over 50% year on year in 2025, and this will likely continue well into the next decade. More EV production means more silver per unit, which adds upward pressure on prices.

5G, Electronics, and Medical Devices

Silver usage doesn’t stop here. It is also very prevalent in more electronics, smartphones and semiconductors along with 5G roll outs due to its unparalleled conductivity properties. India is one of the largest smartphone markets in the world, and with the surge in 5G roll outs, the demand for silver from the electronics industry will continue to grow.

Further, devices commonly used in healthcare include surgical instruments, catheters, and wound dressing, all incorporating silver for its antibacterial properties. Increased demand for healthcare in general following the pandemic has heightened industrial consumption of silver.

Global Factors and Supply Constraints

Domestic demand plays a big role overall, but global supply constraints are also playing a role in Indian silver prices, as some of the major silver producing countries, such as Peru and Mexico, have experienced declining silver outputs due to labor issues, regulatory changes, and declining ore grades. Since India imports most of its silver, any disruption in the global production of silver results in an increase in price in any given Indian silver price.

In addition, market demand for silver is being driven partly by an increase in central bank and institutional investor considerations for including more silver into their portfolios as a strategic asset, not just to hedge but also to meet their ESG (Environmental, Social, and Governance) aligned portfolio holdings which increase the demand pressures on any potential supply.

FAQs

Why is silver seen as both a valuable metal and an industrial commodity?

Silver is both a source of cultural and investment value, and it is a valuable commodity used in industries, including solar energy, electronics, automotive and healthcare.

How does industrial demand influence silver prices in India?

As industrial demand accelerates, especially from solar energy and electric vehicle industries, silver consumption will accelerate, raising the market price.

What is the influence of the solar industry on silver demand in India?

The solar photovoltaic industry uses silver in solar panels, due to its conductive properties, and this will account for approximately 15% of India's silver consumption in 2025.

What influence is the electric vehicle (EV) industry having on silver consumption?

Electric vehicles (EVs) use silver for electrical features, such as batteries and wiring. Based on India's rapid growth in EVs, it's anticipated to see a drastic rise in silver demand.

What are some of the global factors impacting silver prices in India?

Globally, countries producing substantial silver face supply constraints. Increased demand from both investors and central banks are also influencing Indian prices.

What is the current trend and future forecast for silver prices in India?

Silver prices have rallied against ₹2 lakh percentile (over 60%) in 2 years. Analysts expect that silver price will reach ₹2 lakh per kg before mid 2026, if silver price accelerates from industrial demand.